Management Buyout

January 20, 2014  |     |     |   0 Comment

A management buyout (MBO) refers to a situation in which the existing managers of a business pool their financial resources to acquire a controlling stake in the business from its shareholders.

Managers generally participate in MBOs for various reasons: They believe that the business is undervalued and since they know the operation well, they can improve it and unlock additional value. Some managers want the freedom and independence of being their own bosses with the power to implement business changes without requiring approval from the shareholders.

An MBO is different from a Management Buy-In (MBI) in which outside managers buy into a business and take over its management.

Author: 

Kris Tabetando provides mergers & acquisitions (M&A) advisory and brokerage services to Internet companies. He also partners with investors to acquire & manage Internet businesses.

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