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Management Buyout - MBO

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Dictionary Says

Definition of 'Management Buyout - MBO'

When the managers and/or executives of a company purchase controlling interest in a company from existing shareholders.
Investopedia Says

Investopedia explains 'Management Buyout - MBO'

In most cases, the management will buy out all the outstanding shareholders and then take the company private because it feels it has the expertise to grow the business better if it controls the ownership. Quite often, management will team up with a venture capitalist to acquire the business because it's a complicated process that requires significant capital.

Related Definitions

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    Buyout

    The purchase of a company's shares in which the acquiring party gains controlling interest of the targeted firm. Incorporating a buyout strategy is a common technique used to gain access ...
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  • Going Private

    A transaction or a series of transactions that convert a publicly traded company into a private entity. Once a company goes private, its shareholders are no longer able to trade their ...
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  • Leveraged Buyout - LBO

    The acquisition of another company using a significant amount of borrowed money (bonds or loans) to meet the cost of acquisition. Often, the assets of the company being acquired are used ...
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    • Shareholder

      Any person, company, or other institution that owns at least one share in a company. A shareholder may also be referred to as a "stockholder".
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    • Private Company

      A company whose ownership is private. As a result, it does not need to meet the strict Securities and Exchange Commission filing requirements of public companies.
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    • Venture Capitalist

      An investor who either provides capital to startup ventures or supports small companies that wish to expand but do not have access to public funding.
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    • Employee Buyout - EBO

      A restructuring strategy in which employees buy a majority stake in their own firms. This form of buyout is often done by firms looking for an alternative to a leveraged buyout. ...
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    • Management Buy-In - MBI

      A corporate action in which an outside manager or management team purchases an ownership stake in the first company and replaces the existing management team. This type of action can ...
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    • Institutional Buyout - IBO

      When an institutional investor, such as a private equity firm or a venture capitalist firm, acquires a controlling interest in a separate company. Institutional buyouts are the opposite ...
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    • Savior Plan

      When management and employees borrow money to invest in their failing company in an attempt to save it. Essentially, a savior plan precedes a management and employee buyout.
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