ABSTRACT

A management buyout (MBO) is a form of transaction in which management teams acquire a firm or its division(s) from its shareholders. As managers often lack sufficient financial resources, these operations are executed with the help of financial backers known as private equity (PE) firms. Early buyouts did not show any significant improvements in productivity, while later deals witnessed increasing patterns of the efficiency gains, as if increasing competition in the PE industry forced financial sponsors to put emphasis on the fundamental changes in the operations of their targets. In parallel to the analyses of changes in productivity and operating performance, scholars also delved into more governance-related factors that affect firms during the buyout transaction. The structure of the PE industry in terms of buyout origins seem to be very different across countries and depends on historical, demographic, and economic factors.