What is a management buyout (MBO)?

Great answers by Alvin and Junus!

Adding a personal observation:

Companies that undergone MBO tends to outperform. With greater skin-in-the-game, comes alignment. Not always, but likely!

Definition: A management buyout (MBO) is a transaction where a company’s management team purchases the assets and operations of the business they manage.

How it affects companies: MBOs are potentially appealing to professional managers because of the greater potential rewards and control from being owners of the business rather than employees. ​​​