Management Buyout

A Management Buyout (MBO) occurs when the existing management team of a company buys out the company from its owners or investors. This means that the managers, who are already familiar with the business operations and strategy, take control of the company. MBOs are often motivated by the desire for greater autonomy or the potential for increased profits. Financing for an MBO usually involves a combination of the managers' personal funds and loans or investments from banks or private equity firms. This process can allow for a smoother transition and preserve the company's culture and vision.