A Leveraged Management Buy-Out (LMBO or MBO) is an acquisition in which the incumbent management team purchases the company they run, financing the transaction through an acquisition holding using leverage. It is one of the most common forms of business succession, particularly for family-owned SMEs where the founder wishes to sell to trusted management. Management typically contributes 10–30% of equity, supplemented by a private equity co-investor, with senior debt and potentially mezzanine completing the financing structure. The design of the management package is a key value-alignment mechanism.

‍

Example: the CEO of a Swiss services SME (revenue CHF 15.0 million, EBITDA CHF 2.5 million, valuation CHF 18.0 million) structures an LMBO with a partner fund. Management invests CHF 800,000 (personal co-investment), the fund contributes CHF 4.2 million and CHF 13.0 million of senior debt is raised from a Swiss bank. Management holds 16% post-acquisition with an additional sweet equity incentive package.

‍

Hectelion structures and advises on LMBOs end-to-end: valuation, financing, shareholders' agreement and management package design.