Management Buyouts by Private Equity Firms

A Management Buyout (MBO) occurs when a company's current managers, often with the help of private equity firms, purchase the business they oversee. Private equity firms provide capital and expertise to facilitate this acquisition. The managers become owners, giving them greater control and a direct stake in the company's success. This process helps the company grow or restructure, with the goal of increasing its value for eventual sale or public offering. In essence, an MBO aligns management's interests with the company's future performance, often leading to improved efficiency and strategic focus.