What is a ‘Management Buyout – MBO’
A transaction where a company’s management team purchases the assets and operations of the business they manage. A management buyout (MBO) is appealing to professional managers because of the greater potential rewards from being owners of the business rather than employees. MBOs are favored exit strategies for large corporations who wish to pursue the sale of divisions that are not part of their core business, or by private businesses where the owners wish to retire. The financing required for an MBO is often quite substantial, and is usually a combination of debt and equity that is derived from the buyers, financiers and sometimes the seller.
Explaining ‘Management Buyout – MBO’
An MBO is different from a management buy-in (MBI), in which an external management team acquires a company and replaces the existing management team. It also differs from a leveraged management buyout (LMBO), where the buyers use the company assets as collateral to obtain debt financing.
Further Reading
- Unternehmenswertsteigerung durch management buyout – ideas.repec.org [PDF]
- Management buyouts and earnings management – journals.sagepub.com [PDF]
- Management buyout announcements and securities returns: a UK study 1984–1989 – onlinelibrary.wiley.com [PDF]
- Family firm succession: the management buy‐out and buy‐in routes – www.emerald.com [PDF]
- An Empirical Analysis of the Operating Performance of Management Buyout (MBO) at Listed Companies [J] – en.cnki.com.cn [PDF]
- Earnings management preceding management buyout offers – www.sciencedirect.com [PDF]
- The unethical exploitation of shareholders in management buyout transactions – link.springer.com [PDF]
- Stressful situations? The case of management buyout/buyins – www.emerald.com [PDF]
- Management buyout announcements and securities returns in the UK: further evidence for the period 1981-91 – www.tandfonline.com [PDF]
- New Management Buy-out Theory: From the View of Investor Protection [J] – en.cnki.com.cn [PDF]
