The management buy‐out arena: differential slip in a tripartite alliance?

Abstract

• The traditional focus on Management Buy-Outs (MBOs) • As the MBO evolves through these phases of decline, this study focuses upon the interactions of three main parties: The Management Team, The Venture Capitalists and The Investment Bankers. The key objective is to capture the difficulties accruing to these parties as the MBO declines.• The failures of the three main parties lie in identities, increasing problems of interaction and lack of communication.• By linking micro, meso and macro levels of analysis a novel way of looking at MBOs is suggested which helps to avoid the trap of focusing only upon the moment the deal is done.

An agency theoretic analysis of value creation through management buy-outs of family firms

“…An MBO will not proceed unless the acquirers expect to be able to realize enough incremental value to justify the purchase of the firm, either by adding value through managerial intervention or exploiting unrealized value opportunities (Contardo & Angwin, 2002). Such value creation is dependent upon many factors: economic conditions, strategy, governance, organizational structure, systems, culture, taxes, and agency costs can all contribute to firm success or failure (Coff, 1999).…”