Management-Buy-out
The term management buy -out (MBO) refers to a company takeover in which management acquires the majority of the capital by the previous owners. If the employee takes over the business, this is referred to as Employee buy-out.
Properties
It may be, for example, involve companies that are economically injured and whose previous owner, the company no longer want to finance. In this case one speaks of a renovation MBO. If the financing substantially over debt, one can also speak of a leveraged management buy -out.
Usually MBO only be funded at a fraction of the private assets of the Board, a large part of the financing provided by financial investors ( for the equity portion of the investment ) and banks ( for the debt portion ). In an MBO, the principal-agent conflict is more or less resolved because after an MBO a larger unit of management and rewards of ownership. The MBO has proven itself especially in business succession. In the MBO of a listed company, it is common, the corporation to re- privatize, in this case one speaks of a privatization MBO. This gives management the opportunity to develop the company regardless of constraints of the stock market.
In case of missing heirs former owners often prefer to hand over their businesses to people known them for many years. The result is that the former owners their companies often offer their own managers to buy, because they trust them as well as to evaluate their business acumen. Another advantage is that you can not all corporate documents foreign buyers, submit as competitors for the view needs and runs the risk of revealing confidential information. A potential risk is, however, the information advantage of management, can lead to the seller being cheated by the management.
In economic imbalances it is usually so that the salaried management can assess the company's situation much better than outside investors or renovators. Therefore, they are in these cases usually more willing to rehabilitate the company and then continue.
- Corporate takeover