Management And Employee Buyout - MEBO

Categories: Entrepreneur

See: Management Buyout - MBO. See: Leveraged Buyout.

The management and workers wanted to go it alone, with no Wall Street-y people bugging them about quarters, running sprints 13 weeks at a time. Instead, they wanted to just build a great company for the next 3-4 years and then take it public, or sell it, or whatever.

MBOs aren't all that common, but when they do happen, they tend to work out well when everyoone, from CEO on down, has a lot at stake, and is rowing the boat...not just 9-to-5, but like co-owners, it's amazing how productive companies can be. Google the Harley Davidson story (where workers and management LBO'd the company and saved it) for glorious details.

Related or Semi-related Video

Finance: What is MBO v LBO?17 Views

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Finance allah shmoop What is an m b o versus

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and lbo Okay let's Get their letters right first And

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n b o is a management buyout Ngos on their

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own aren't all that common But in a given company

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inside management might own same thirty percent of the stock

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They might partner with another investor who owns a twenty

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percent or more And then they might borrow say fifty

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percent in debt and take the company private fixit pivot

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tweak live with bad quarters for a while without wall

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street yelling at him And then they might sell the

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company cell or whatever Maybe take it public again will

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The distinctive feature here is that the company is already

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in place Management is doing the deal and more often

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than not essentially all the net worth of the management

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will be in the company leveraged when the embryo is

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completed And that level of financial commitment really keeps the

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team focused Because if things don't work out when they

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lose everything your house their car in there Slinky collection

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All right next up we have an lbo which is

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a leveraged buyout and it just refers to the practice

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Of taking on debt to buy a company sometimes with

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same management sometimes with different players like an lbo is

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a bigger venn diagram set than the embryo thing Well

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in an lbo the same basic thing happens But in

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a whole bunch of cases management is tossed out The

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company wouldn't be quote vulnerable unquote to an lbo Had

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management done a good job and kept the company trading

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or valued at a high multiple where it would then

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be almost impossible to make the risk reward scenario workout

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in taking out a whole lot of debt to get

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company bought and then turned in the right direction Instead

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new management in lbo is usually brought in and resembling

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moses noah and other biblical characters and their perceived greatness

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and there's a stone tablet with a new set of

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commandments Thou shalt be profitable or something like that Arguments

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are had at the board level and eventually either the

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lbo works and the company has taken public again or

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sold for a big price Or it isn't and wrath 00:02:06.63 --> [endTime] has had

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