---
title: "What Is Management Buyout? Private Equity Glossary"
description: "A management buyout is a sale of a company to its own senior managers, usually funded with outside capital such as debt or an investor."
url: https://capstreet.multisites.ai/glossary/management-buyout
publisher: Capstreet
phone: +1-713-332-2700
contact: https://capstreet.multisites.ai/contact
---

Deal structure

# Management Buyout

A management buyout is a sale of a company to its own senior managers, usually funded with outside capital such as debt or an investor.

In a management buyout, or MBO, your own leadership team buys the company from you. Managers rarely have enough cash alone, so they bring in lenders or a private equity partner to fund the price.

For example, a company sells for $20 million. The managers put in $1 million, a lender provides $9 million and an investor provides $10 million. The managers now run and co-own the business.

An MBO can protect culture and keep the team in place. The trade-offs are that managers may not have deep funds, the price may be lower than a competitive process, and you may need to finance part of it yourself.

Think about whether your team is ready and willing to take on the debt. Compare your options in [private equity vs management buyout](https://capstreet.multisites.ai/compare/private-equity-vs-management-buyout). See also [leveraged buyout](https://capstreet.multisites.ai/glossary/leveraged-buyout) and [seller financing](https://capstreet.multisites.ai/glossary/seller-financing).

[Read nextPrivate equity vs management buyout: how to choose between them](https://capstreet.multisites.ai/compare/private-equity-vs-management-buyout)

## Related terms

-   [Leveraged Buyout](https://capstreet.multisites.ai/glossary/leveraged-buyout)
-   [Seller Financing](https://capstreet.multisites.ai/glossary/seller-financing)
-   [Incentive Equity](https://capstreet.multisites.ai/glossary/incentive-equity)

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