Glossary

With over 200 terms in both English and French, our M&A Dictionary is designed to help you better understand the key words and concepts related to the sale oe purchase of a business in Canada.

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Management Buy-out

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Category: Mergers and Acquisitions

Definition:

A management buy-out (MBO) in the context of mergers and acquisitions (M&A) refers to a transaction in which the existing management team of a company acquires a significant ownership stake or complete ownership of the business. In other words, the managers currently running the company, often with the support of external financial backers such as private equity firms, purchase the business from its current owners, which could be the original founders, other shareholders, or a parent company. Management buy-outs are often pursued for various reasons, including a desire for independence, a belief that the current management team can enhance the company’s performance, or an opportunity for the existing managers to become owners and share in the financial success of the business. The success of a management buy-out depends on the ability of the management team to execute their strategic plans and drive positive results for the company after gaining ownership control.