Loan for a small MBO (management buy-out)
Funding for the management team to buy the business from the owner. UK SMB MBOs typically run £500k to £10m. Below that the deal mechanics still apply but mainstream MBO lenders are less interested.
Who needs this
Management teams acquiring an established business from a retiring or exiting owner. Funding mix typically blends senior debt, vendor loan, and management equity contribution.
Products that fit
- Senior debt (term loan or bespoke commercial loan)
- Vendor loan from the seller
- Asset-backed finance against the company's plant / property
- Mezzanine debt for £1m+ deals
Top UK lenders
- OakNorth for bespoke deals
- Allica Bank for asset-backed senior debt
- Specialist MBO brokers for complex structures
Watch outs
- Vendor loan terms materially affect deal-shape; negotiate length and interest carefully.
- Working capital post-completion needs separate provision.
- PG terms on the new debt are heavier than acquiring an asset.
Alternatives worth considering
- Phased acquisition via earn-out
- External equity partner (PE / family office) for larger deals
Apply
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Open our /get-quotes/ form →Last reviewed: 2026-04-26.