Management Buyout

Posted in Finance, Accounting and Economics Terms, Total Reads: 1090
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Definition: Management Buyout

An acquisition in which the board members/ executives/ managers buy the shares of the company from its existing shareholders partially or fully and then take the company private, this kind of buyout is called as management buyout.

For example: Company A is a public listed company and management has 25% of the shares of the company, the rest of the 75% of the shares are controlled by the public, under the agreement the management has to have atleast 51% of the shares to take it private, in this case the management has to buy atleast 26% of the shares from the public.  

 

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