Why More Family Firms Might Turn To Management Buy-Outs In 2026

As many family-owned businesses across the UK brace for the generational handover of leadership, the idea of a Management Buy-Out (MBO) is fast gaining traction as a viable, and increasingly necessary, alternative to traditional succession.

According to Paul Andrews, Founder and CEO of Family Business United, the coming years could see a marked increase in such internal buyouts. With changes to inheritance‑tax rules and widespread uncertainty about long-term viability under older‑generation ownership, he believes the next wave of transitions may not necessarily mean handing the reins to a younger family member — it could mean handing them to the management team.

In a recent FBU report on what lies ahead for family firms, Andrews acknowledges that from April 2026 new tax rules will remove much of the certainty surrounding inheritance and the transfer of business ownership and create uncertainty and complexity as a result.

“Planning has never been more important,” he says, urging families to initiate conversations sooner rather than later. Given this uncertainty, many owners may look to sell, not to external competitors, but to those already running the business day to day.

An internal buyout offers several advantages. From a human perspective, it may ease generational tension: management often comprises those who already know the business’s operations, culture and people intimately. For families who lack a ready next-generation leader, or for whom next-gen interest is lukewarm, an MBO offers continuity, retention of institutional memory and a smoother transition than handing over to inexperienced heirs. Over the past few years, as many as 43% of family firms surveyed by Family Business United reported that they expect a leadership transition within the next five years.

Still, Andrews stresses that such buyouts must be approached with care. Family firms are defined not just by their financial performance but by shared values, long-term thinking and often a sense of stewardship, ideals that can be lost if the wrong management team takes over. For this reason, he argues that the decision to pursue an MBO should come from a place of strategy and shared vision, not merely short-term pressure.

“If a management buyout is handled well,” Andrews suggests, “it can deliver a future for the business that preserves legacy while adapting to the financial and regulatory realities of the modern era.”

Yet, he cautions, it would be wrong to assume MBOs will be the easy option. They require realistic valuations, transparent communication, fair terms and often a willingness among senior family shareholders to step back — emotionally as much as practically. “The opportunity is there,” he says, “but it demands honesty, discipline and a genuine commitment to what the business stands for.”

In a climate of rising tax burdens and economic headwinds, MBOs, once a niche route, may soon become a mainstream succession tool for family firms wanting to stay in the family, but not strictly in the bloodline.

And with thoughtful planning, 2026 could mark the beginning of a structural shift in how Britain’s family-owned businesses manage their future.