A management buyout (MBO) is a transaction in which the company’s executive management acquires the ownership of the company. MBO is a relatively low-risk way for a manager to transition from a paid employee to an owner. When the management has the motivation and expertise to develop the business and the desire to become the owner, it is very likely that the transaction will be successful, and the company’s operations will continue smoothly.
MBO transaction proceeds in the same way as other acquisitions, except for the mapping of purchase or sale targets. You can read more about the stages of the acquisitions on the Sale of a company or Purchase of a company pages.
A management buyout, on the other hand, often requires special expertise in obtaining financing, involving investors, drafting a shareholder agreement and preparing supply or service agreements with the seller. A professional expert knows the best ways to obtain financing and is able to advise on the most important factors to consider when drafting and negotiating contracts.
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