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Lane Kirkland

Investment Dictionary

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Management Buyout


A management buyout (MBO) is an acquisition of a company when company’s management gets the control interest in the company. Management buyout can be placed on if existing shareholders agree to sell their shares to the shareholders (if company’s free float isn’t very high), but in that case always many questions are arising: why management wants to invest in it? If they believe that can achieve better results, why they aren’t doing right now for the current shareholders?


Management buyouts are quite common; however, the shareholders should think very well before sell the shares to management, because not always sincere reasons may lie beyond it. If management uses a lot of debt capital then it is a leverage buyout too. 

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