Challenges and issues at the heart of the buyer-investment fund relationship during an external transfer of SMEs.


An MBI (Management Buy In) involves the acquisition of a company by a buyer from outside the target company as part of a leveraged buy-out package. There are less than 300 MBI transactions accompanied by investment funds each year in France.

  • What are the challenges for the buyer and the investment fund in an MBI transaction?
  • What are the potential tensions between the buyer and the investment fund during the development and then the functioning of the entrepreneur-investor relationship in the context of an MBI transaction?
  • How to anticipate the emergence of these tensions?

Research impact(s): 

A number of tools were developed for the use of stakeholders, i.e., buyers, individuals wishing to launch a business acquisition project with an investment fund, and investment funds carrying out MBI transactions, as well as their respective advisors:

  • A taxonomy of LBO funds (Leveraged Buy Out) giving buyers an overview of the different categories of players in the market, thus enabling them to choose the financial partner best suited to their project.
  • A mapping of potential tensions between the buyer and the investment fund, according to their temporality and intensity.
  • A tool for predicting explicit tensions between the buyer and the investment fund. This predictability is broken down into 6 different sequences.
  • A dynamic and predictive tool to measure potential tensions and the level of trust within the buyer-investment fund relationship.

For example, with the help of the latter tool, an investment fund can anticipate the occurrence of conflicts and the deterioration of the level of trust during the course of the operation. It is then able to take corrective action to remedy these tensions and avoid irreversible deterioration in trust.

On a theoretical level, the role of trust in the management of tensions between the buyer and the investment fund was examined in the light of the theory of paradoxical tensions (Smith and Lewis, 2011). The importance of cognitive biases in relation to the tensions between the buyer and the investment fund was highlighted and agency theory was revisited from the perspective of the potential tensions between the members of the relationship.

Research fundamentals: 

The review of the literature was conducted from the perspective of the challenges faced by each of the actors, the buyer and the investment fund.

The model of paradoxical tensions developed by Smith and Lewis (2011), which reveals a dialogical logic of opposing centres (Thélissson, Meier, Missonier and Guieu, 2018), a bipolarity of tensions (Brulhart, Grimand, Krohmer, Oiry and Ragaigne, 2018), was the prevailing theory underlying the research.

Research methodology:

An abductive approach was chosen, involving a to-and-fro between the theory and the field. 
The research design was qualitative and the methodology used was that of case studies of investor-takeover relationships.

To this end, 15 in-depth interviews were conducted with LBO buyers and investment funds, 5 expert interviews were conducted with investment funds that had carried out an MBI transaction that was counterproductive in terms of value creation or that had failed, and 2 expert interviews were conducted with professionals involved in the MBI process, in this case a business lawyer and a recruitment and evaluation specialist.

These interviews were preceded by 50 exploratory interviews with individual buyers at the beginning of their buyout journey. The qualitative analysis of the interviews was entrusted to the teams of the SPHINX laboratory and carried out using the SPHINX IQ2 software package It gave rise to a lexical and semantic overview, as well as a manual content analysis.

Further reading:

Article le monde du chiffre : baromètre de la relation manager – fonds d’investissement (2021).  

(Barometer of the relationship between managers and investment funds).

Thierry Lamarque et Martine Story, Reprendre une entreprise – 2ème édition (Ed.Maxima, 2018). (Taking over a business).

Thierry Lamarque, Martine Story, Reprise d’entreprise – Tout pour réussir votre négociation (Ed.Maxima, 2013).

(Taking over a company – The key to successful negotiations).

Feedback from panel members

In terms of content, Mrs Story-Lamarque has managed to conduct a clearly justified research approach, with a firm grounding in the field of practice. The work contributes to the literature on entrepreneurship by proposing a study of a specific form of takeover by a private individual, the takeover being backed financially by an investment fund (Professor Deschamps, examination panel member).

The tool proposed is interesting, and I hope that this experience of research carried out by Mrs Story-Lamarque will enable her to remember in her practice the value of doubt, theory and academic work (Professor Barredy, thesis supervisor).