Glossary · Deal process
Management buyout
Also called MBO
Definition
A management buyout (MBO) is the purchase of a company by its existing management team, typically with financing from a private equity fund and lenders. Because the buyers already know the business, diligence focuses on the financing and on what outside investors need to see.
Related terms
Leveraged buyout An acquisition paid for largely with borrowed money, secured on the target company itself. Binding offer A buyer's final offer after due diligence, usually with a marked-up purchase agreement attached. Bolt-on acquisition A smaller company bought to add to an existing platform business, common in private equity. Buy-side The buyer's side of a deal: the acquirer or investor, and the advisers who help them find, check and price a target. Carve-out The sale of a division or business unit that has to be separated from its parent company. Clean team A small, ring-fenced group allowed to see a competitor's sensitive data during a deal, under strict rules. Corporate development The in-house team that finds, runs and integrates a company's acquisitions and partnerships. Distressed M&A Buying or selling a business in financial trouble, often under time pressure or in insolvency.