What is a management buyout (MBO)? - Seedly
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Anonymous

Asked on 19 Oct 2019

What is a management buyout (MBO)?

And how does it affect companies?

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Kelvin Seetoh
Kelvin Seetoh, Founder at Kelvestor.com
Level 6. Master
Answered on 03 Dec 2019

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!

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Junus Eu
Junus Eu
Level 9. God of Wisdom
Answered on 03 Dec 2019

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. ​​​

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Alvin Teo
Alvin Teo
Level 6. Master
Updated on 21 Oct 2019

Https://en.m.wikipedia.org/wiki/Management_buyout

Imagine a Chef who started a restaurant with a sleeper partner just to fund business. Over the years, if the chef has saved up quite a bit, he may be keen to buy out the partner’s share to keep running the business.

If buyouts are from management, usually the intention is to further the business, read the reports they put out and determine if it’s good for you.

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