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.
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.