Management Buyout (MBO)
An acquisition in which a company's management team purchases the business.
What is MBO?
A management buyout (MBO) is a transaction in which a company's existing management team acquires the business, typically in partnership with a private equity firm. Management brings operational expertise and inside knowledge; the PE firm provides financial resources and deal execution. MBOs often occur when a parent company wants to divest a subsidiary, when a public company wants to go private, or in succession planning for private businesses. Because management's interests are aligned with ownership, MBOs can unlock performance improvements difficult to achieve under external ownership.
Example
In 2013, Michael Dell and Silver Lake Partners completed a $24.4 billion MBO to take Dell Inc. private, freeing the company from quarterly public market pressures to restructure and transform its business model.