It is not unusual for minority owners or a management group to participate in a refinancing or recapitalization to facilitate the buyout of existing ownership interests. Eagle Advisory Services maintains an extensive network of potential resources to facilitate this process, including commercial banks, private equity funds, and mezzanine finance groups.
A management buyout is a corporate finance transaction where the management team of an operating company acquires the business by borrowing money to buy out the current owner(s). This transaction is a type of leveraged buyout and can sometimes be referred to as a leveraged management buyout.
In a MBO transaction the management teams believe they can use their expertise to grow the business, improve its operations, and generate a return on their investment. These transactions typically occur when the owner-founder is looking to retire or a majority shareholder wants out.
Lenders often like financing management buyouts because they ensure continuity of the business’ operations and executive management team. This transition often sits well with customer and clients of the business as they can expect the quality of service to continue.
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