Management buyout
The term management buyout ( MBO ) describes a company takeover in which the management acquires the majority of the capital from the previous owners . If the workforce takes over the company , this is referred to as an employee buy-out .
properties
It can be, for. B. are companies that are economically troubled and whose previous owners no longer want to finance the company. In this case one speaks of a restructuring MBO. If the financing takes place mainly through outside capital , one can also speak of a leveraged management buy-out .
As a rule, MBOs are only financed to a fraction of the private assets of the management, a large part of the financing is provided by financial investors (for the equity portion of the investment) and banks (for the debt portion ). With an MBO, the principal-agent conflict is more or less resolved, since after an MBO there is a greater unity of management and ownership.
advantages
The MBO has proven itself particularly in the case of company successions. With the MBO of a listed stock corporation , it is common to re-privatize the stock corporation, in this case one speaks of a privatization MBO. This gives management the opportunity to develop the company independently of the pressures of the stock market.
In the case of missing heirs , previous owners often prefer to hand over their company to people they have known for many years. This leads to the fact that the previous owners often offer their company to their own managers for sale, because they trust them and can also judge their commercial skills. Another advantage is that you do not have to present all company documents to third-party buyers, for example competitors, for inspection and there is a risk of confidential information being disclosed.
In the case of economic difficulties, it is usually the case that the employed management can assess the situation of the company much better than external investors or renovators. Therefore, in these cases they are usually more willing to restructure the company and then continue it.
disadvantage
The transition from manager to owner requires an adjustment in mentality. Not all managers are successful at this.
When managers bid for their own company, there is a conflict of interest. A potential risk is the information advantage of the management, which can lead to the sellers being taken advantage of by the management. Management could also downplay or willfully sabotage the company's future prospects in order to buy at a bargain price.
See also
Individual evidence
- ↑ Management Buyout - MBO ( English ) Investopedia. Retrieved December 9, 2014.