Management Buyout - MBO

Think: an LBO or Leveraged Buyout, only done by existing management.

MBOs aren’t all that common, but in a given company, inside management might own, say, 30% of the stock. They might partner with another investor who owns 20% more, and then they might borrow, say, 50% in debt...and take the company private.

Fix it. Pivot. Tweak.

And then sell...or whatever. The distinctive feature here is that it’s the company’s already in-place management doing the deal, and more often than not, essentially all the net worth of the management will be in the company, leveraged, when the MBO is completed.

That level of financial commitment really keeps the team...focused.