What is management buyout?

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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.