What is a management buyout (MBO)?

A management buyout is the acquisition of a business by its core management team usually in coordination with an external party such as a credited lender or a private equity firm.

The motivation of an MBO stems from the owner who has a desire to retire and either sell the whole business or a controlling stake in the entity. Although being fairly compensated is a priority, the independence and culture of the business is very important postsale.

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