Leveraged Buyouts (LBO) & Management Buyouts (MBO)

Leveraged Buyouts also referred to as LBO, refer to the acquisition of a business using mostly debt and a small amount of equity. The debt is secured by the assets of the business. In an LBO, the acquiring company uses its own assets as collateral for the loan in hopes future cash flows will cover the loan payments.

Management Buyouts also referred to as MBO, refer to a situation when the managers and/or executives of a company purchase a controlling interest in the business from existing shareholders. In most cases, the management will buy out all the outstanding shareholders because it feels it has the expertise to grow the business better if it controls the ownership. Quite often, management will team up with an investment bank such as SPA, as this is a complicated process that requires significant business financing.

SPA provides expert financial advisory services to clients considering a leveraged buyout, management buyout, or reorganization. SPA’s priority is to optimize transaction structure and coalesce around our clients’ strategic objectives and operational goals.