Glossary Index / Management Buy-Out (MBO)

Management Buy-Out (MBO)

Where the management of a company Acquires all or some of the ownership of the company they manage, either independently or in partnership with a private equity fund/group (PEG).

Management buy-outs (MBOs) are generally pursued by management teams that have little or no ownership in a business and want to obtain more ownership but lack the financial resources to buy the company from the current owners.

In these circumstances, a PEG can provide the financing necessary to Acquire the business.  The PEG also gives the management team a large equity stake to cement their commitment to continue running the business and pursue growth opportunities.