What is referred by management buyout (MBO)?

A management buyout (MBO) is an operation in which the management team of a firm buys the assets and operations of the firm they run. Professional managers like management buyouts because they have more potential benefits and influence as owners of the company rather than workers. Personal resources, private equity financiers, and seller-financing are common sources of funding.

In its simplest form, a management buyout (MBO) is a transaction in which the management team pools resources to acquire all or part of the business they manage. MBOs can occur in any industry with any size business. They can be used to monetise an owner’s stake in a business or to break a particular department away from the core business. In some cases, an MBO will take a company from publicly-traded to private.