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Management buy-ins in the UK

Author

Listed:
  • Robbie, K
  • Wright, M
  • Thompson, S

Abstract

In the mid-1980s, many UK venture capitalists developed investments in management buy-ins as an extension of their successful interest in the related area of management buy-outs. This paper presents the results of the first survey of the performance effects of a representative sample of 59 management buy-ins. The study reveals substantial restructuring following management buy-ins and also indicates that the performance levels after the buy-in are likely not to meet those originally intended. Extensive changes in product portfolios are reported. Management changes appear to be highly significant. Performance seems to be below that found in studies of management buy-outs and the extent of changes occurring appears to be considerably greater than in buy-outs. There seems in general to have been an underestimation of the extent of likely problems at the time the investment was being appraised, as indicated by the importance of "skeleton in the cupboard" type problems which subsequently emerged. Whilst this might call into question the thoroughness of the institutions' due diligence process, it may also reflect an asymmetric information problem that is greater in buy-ins than in buy-outs. There does appear to be a higher level of monitoring of buy-ins than for buy-outs.

Suggested Citation

  • Robbie, K & Wright, M & Thompson, S, 1992. "Management buy-ins in the UK," Omega, Elsevier, vol. 20(4), pages 445-456, July.
    • Handle: RePEc:eee:jomega:v:20:y:1992:i:4:p:445-456
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    Citations

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    Cited by:

    1. Reddy, Kotapati Srinivasa, 2015. "Market for Corporate Control and Contractual Buyout (CoBO): A New “Collective Ownership-and-Administrative” Strategy," MPRA Paper 63937, University Library of Munich, Germany, revised 2015.
    2. Sophie Manigart & Koen De Waele* & Mike Wright & Ken Robbie & Philippe Desbrières & Harry Sapienza & Amy Beekman, 2000. "Venture capitalists, investment appraisal and accounting information: a comparative study of the USA, UK, France, Belgium and Holland," European Financial Management, European Financial Management Association, vol. 6(3), pages 389-403, September.
    3. Olivier, Gottschalg & Meier, Degenhard, 2006. "What does it take to be good parent ? Opening the black-box of value creation in the unrealated multibusiness firm," HEC Research Papers Series 822, HEC Paris.
    4. Loris Guery & Anne Stevenot & Geoffrey T. Wood & Chris Brewster, 2017. "The Impact of Private Equity on Employment: The Consequences of Fund Country of Origin—New Evidence from France," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 56(4), pages 723-750, October.
    5. K.S. Reddy & En Xie & Yuanyuan Huang, 2016. "Contractual buyout - a legitimate growth model in the enterprise development: foundations and implications," International Journal of Management and Enterprise Development, Inderscience Enterprises Ltd, vol. 15(1), pages 1-23.
    6. Aurélie Sannajust & Alexander Groh, 2023. "Pioneering management buy-out and entrepreneurial finance research: Mike Wright’s research legacy," Small Business Economics, Springer, vol. 60(1), pages 1-35, January.
    7. Wright, Mike & Robbie, Ken & Ennew, Christine, 1997. "Venture capitalists and serial entrepreneurs," Journal of Business Venturing, Elsevier, vol. 12(3), pages 227-249, May.
    8. Mike Wright, 2007. "Venture capital in China: A view from Europe," Asia Pacific Journal of Management, Springer, vol. 24(3), pages 269-281, September.
    9. Mike Wright & Ken Robbie & Yves Romanet & Steve Thompson & Robert Joachimsson & Johan Bruining & Artur Herst, 1994. "Harvesting and the Longevity of Management Buy-outs and Buy-ins: A Four-Country Study," Entrepreneurship Theory and Practice, , vol. 18(2), pages 90-109, January.
    10. Fabio Buttignon & Marco Vedovato & Paolo Bortoluzzi, 2005. "Family business investor byouts: the Italian case," "Marco Fanno" Working Papers 0004, Dipartimento di Scienze Economiche "Marco Fanno".

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