Management buyout (MBO)

In a management buyout, the managers who already run a business acquire it, usually with financial backing from an investor or lender who supplies most of the purchase price. An MBO appeals when an owner wants to step back and the existing team knows the business best, since it keeps leadership, relationships, and operating knowledge intact through the transition. It is a common route for succession, letting a founder pass a company to people who have already proven they can run it. The counterpart is a management buy-in, where an outside team buys the business and takes over its leadership.

For a permanent-capital owner, the spirit of an MBO, keeping capable operators in command of what they build, aligns closely with a partnership model where the people who built a business stay in charge while a committed owner provides the capital and backing behind them. The structure differs, but the intent, continuity of leadership, is often the same.