MANAGER BUYOUTS (MBOs)

Within the context of this paper, however, the term "management buyout" is defined generally as a transaction "in which one or more management employees acquire part or all of the ownership of a company" (InterFinancial Investment Bankers and Corporate Advisers, 2004, p. 1). In specific instances, however, an MBO may apply to the acquisition by management of a division of a company or of some specific profit-center operation of a company.

An MBO, therefore, is a specific type of a buyout, which is "a transaction in which a company, business, or business unit is acquired from the current shareholders" (Tiainen, 2005, p. 6). The MBO is differentiated from manager buy-in (MBI). In an MBO transaction, the managers involved in the acquisition of ownership of a company's assets are managers who are a part of the company whose assets are being acquired. In an MBI transaction, the managers involved in the acquisition of ownership of a company's assets are managers who are external to

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Approximate Word count = 1023
Approximate Pages = 4 (250 words per page)