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date: 28 July 2021

management buy-out (MBO) 

A Dictionary of Business and Management

Jonathan Law

The acquisition of a company or a subsidiary by the existing management. It is frequently used as a means of divestment by companies seeking to focus on their core activities. The new owner-managers of the buy-out frequently improve its performance as they usually are well aware of any remedial action required and have a serious incentive in the form of their equity stake. Additional capital is provided by financial institutions and venture capitalists and also in many cases by allowing other employees to buy shares. In a few instances, all employees have participated in a buy-out; these are sometimes called ... ...

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