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Unlocking the Potential of MBOs

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  • Duran-Fernandez, Roberto

Abstract

This paper analyzes Management Buyouts (MBOs), where management teams acquire their companies. It explores various MBO types, such as Traditional, Employee, Management Employee, Divisional, and Buy-in Management Buyouts, each with distinct characteristics. The rationale for MBOs includes investor exit strategies and the alignment of management incentives for better company performance. Key triggers for MBO development include financial sector liberalization and a specialized financial ecosystem. Success factors for MBOs are identified as cash generation capacity and effective management. The paper also discusses the life cycle of MBOs, their impact on productivity and human capital, and the complexities involved, such as information asymmetry and agency problems. This paper contributes to the understanding of MBOs, providing insights that can inform both academic research and practical applications in the dynamic world of corporate finance.

Suggested Citation

  • Duran-Fernandez, Roberto, 2023. "Unlocking the Potential of MBOs," EconStor Preprints 280774, ZBW - Leibniz Information Centre for Economics.
    • Handle: RePEc:zbw:esprep:280774
    as

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    References listed on IDEAS

    as
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    6. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    7. Lee, D Scott, 1992. "Management Buyout Proposals and Inside Information," Journal of Finance, American Finance Association, vol. 47(3), pages 1061-1079, July.
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    More about this item

    Keywords

    Management Buyout (MBO); Employee Buyouts (EBO); Management Employee Buyouts (MEBO); Divisional Buyout (DBO); Buy-in Management Buyout (BIMBO);
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation

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