What are Management Buyouts and Why do they Occur?

What are Management Buyouts?

Management buyouts occur when the management buys a portion or all of the shares of a company.

Advantages of a Management Buyout

MBOs offer advantages for both the owners and management:

• Owner - The information of the business is kept confidential
  because no outside investor is buying the company. There is also minimal transition issues for clients or employees and the overall risk of the business failing decreases because there will be no change in management.
• Management - They receive an increased potential for return and the investment in a business that they understand.