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Management Buyout - MBO

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Dictionary Says

Definition of 'Management Buyout - MBO'

An instance whereby the managers and/or executives of a firm purchase a controlling interest in the company from existing majority shareholders. In most management buyouts the management group is required to borrower large sums of capital in order to afford to payout existing shareholders, which as a result, leads to the firm holding a greater amount of debt on its balance sheet.
Investopedia Says

Investopedia explains 'Management Buyout - MBO'

In the majority of MBO cases, management will buy out all the outstanding shareholders and take the company private, under the belief that the management group has the expertise to lead the business successfully if it controls ownership. Quite often, management will team up with one or more private equity firms to buyout the business due to the buyout experience required to facilitate such a transaction.

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