BIMBO

BIMBO
See also
Capital Commitment Anonymous Trading Subcontractor Promotional campaign Skimming pricing strategy Centralized purchasing B2B social media marketing Computer department Strategic partnership and negotiations

BIMBO (Buy-in management buy-out) is the combination of a management buy-out and a buy-in. (Watson D., Head A. 2007). Management Buy-Out involves acquisition of an equity stakes in an existing company by its existing management.

Management Buy-In is taking place when company is being purchased by new management (Pike R., Neale B., 2003).

In the case of BIMBO a company is acquired by existing management joined by new, key directors or managers. The main advantage of this option is that it may help to increase the quality of management as it provides new member of the team with knowledge and experience of existing management (Arnold G., 2005).

In a comparison to MBO, BIMBO allows us to maintain a continuity of management and it is less risky than MBI. BIMBO, as a combination of MBI and MBO seems to be a compromise solution but it does not stand for that it is always the best option.

BIMBO Limitations

Some limitations of a BIMBO (buy-in management buy-out) include:

• Financing: BIMBOs can be complex and costly to finance, and may require a significant amount of debt or equity.
• Management: BIMBOs often rely on the management team of the target company to lead the business after the buy-out, which can be risky if the management team is not experienced or capable.
• Cultural fit: If the management team does not share the same values and culture as the acquiring company, it can lead to integration challenges and a lack of alignment.
• Legal and regulatory: BIMBOs are subject to a variety of legal and regulatory requirements, which can add complexity and delay to the transaction.
• Due Diligence: In a BIMBO, the acquirer must conduct thorough due diligence of the target company's financials, operations, and management, which can be time-consuming and costly.
• Risk of failure: BIMBO transactions can be complex and risky, and there is a higher risk of failure if the management team is not able to successfully lead the company post-acquisition.

References

• Arnold G., (2005), Corporate Financial Management. 3rd edition. Essex: Pearson Education Limited.
• Pike R., Neale B. (2003), Corporate Finance and Investment. Decision and Strategies. 4th edition. Essex: Pearson Education Limited
• Watson D., Head A. (2007), Corporate Finance. Principles & Practice. 2nd edition. Essex: Pearson Education Limited.

Author: Andrzej Tomasiewicz