What is a Management Buyout (MBO)?

A Management Buyout (MBO) refers specifically to a transaction in which an existing management team acquires part or all of a company, typically with the goal of gaining greater control over the business and its operations. This process often involves management leveraging their intimate knowledge of the company to drive improvements and foster growth.

MBOs can provide several advantages, including alignment of interests between management and shareholders, as the management team has a vested interest in the company's performance after the buyout. This type of transaction is commonly funded through a combination of personal investment from the management team and external financing, such as bank loans or private equity investment.

The other concepts listed, such as acquiring a competitor, raising funds from public investors, or liquidating assets, do not align with the nature of a Management Buyout, as they involve different strategic objectives and mechanisms.