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Simple English definitions for legal terms
management buyout
Read a random definition: sea brief
A quick definition of management buyout:
A management buyout is when the people who work for a company buy the company from its current owners. This is called a buyout. The people who work for the company are called the management. So, a management buyout is when the management buys the company they work for.
A more thorough explanation:
A management buyout is a type of buyout where the current management team of a company purchases a controlling stake in the company from its current owners. This allows the management team to take control of the company and run it as they see fit.
Let's say that XYZ Corporation is currently owned by a group of investors who are looking to sell the company. The management team of XYZ Corporation, led by the CEO, decides to purchase a controlling stake in the company through a management buyout. They secure financing from a bank and other investors, and use the funds to buy out the current owners. Once the buyout is complete, the management team takes control of the company and begins running it independently.
This example illustrates how a management buyout can allow the current management team to take control of a company and run it independently. It also shows how financing from banks and other investors can be used to fund the buyout.