Legal Definitions - MBO

Definition: MBO stands for Management Buyout. It is a type of buyout where the current management team of a company purchases a controlling stake in the company from its existing owners. This allows the management team to take control of the company and run it as they see fit.

Example: Let's say that XYZ Corporation is owned by a group of investors who are looking to sell their shares. The current management team of XYZ Corporation decides to pursue a management buyout and purchases a controlling stake in the company. This allows them to take control of the company and make decisions without interference from outside investors.

Explanation: The example illustrates how a management buyout works in practice. The current management team of a company decides to purchase a controlling stake in the company from its existing owners. This allows them to take control of the company and run it as they see fit, without interference from outside investors. This can be a good option for management teams who believe that they can run the company more effectively than the current owners or who want to take the company in a different direction.