MBOs help improve businesses

According to the Centre of Management Buyout Research (CMBOR), separation from a parent company is good for business.

Management buyouts can result in increased customer and supplier bases, according to a new report from the Centre of Management Buyout Research (CMBOR). The group, part of Nottingham University and sponsored by Barclays Private Equityand Deloitte & Touche, found that 60 per cent of the UK divestment buyouts it interviewed saw an increase in business.

More than half of the 80 firms involved in the survey, which had gone through buyouts between 1997 and 1998, had subsequently implemented plans to increase their customer base. 30 per cent had made changes to their product range. And despite decreases in trading relationships with the former parent, the overall quality of trading relations across the board were considered to be good.

The report also found that around 30 per cent of the companies interviewed had a loan from the parent business, and that in only 6 per cent of the cases did the parent company retain an equity stake.