MBO (management buy-out) meaning

This Resource Note summarises the core provisions of Rule 21 of the City Code on Takeovers and Mergers (the Code). It covers the limits on an offeror taking frustrating action in connection with an offer, and the approach to inducement fees and other offer-related arrangements. Rule 21 also mandates that competing offerors are given equivalent information, and that the offeree’s independent directors receive all information supplied to external finance providers in a management buy-out. It signposts relevant materials, commentary and guidance from the Panel on Takeovers and Mergers (the Panel), alongside Lexis+® UK analysis and resources, to provide practical direction on the interpretation and application of Rule 21... Materials covered in this Resource Note include: Practice Statements issued by the Panel Executive (the body responsible for the day-to-day supervision and regulation of takeovers) (Executive), offering informal guidance on how the Executive typically interprets and applies the Code Panel Statements issued by the Panel (P/S) and Panel Instruments Public Consultation Papers (PCP) and Response Statements...

Management’s position in a management buyout (MBO) or management buy‑in (MBI) is frequently characterised by tension and potential conflict: on one side they act as owners and participants in the target enterprise, while on the other they remain employees and officers subject to the control and employment of the primary backer (ie the private equity fund). For management, an MBO or MBI is an appealing way to obtain finance to expand an existing business and to capture the rewards of that expansion as part‑owners of the business. Nevertheless, there are meaningful risks for management, both at the initial investment phase and throughout the life of the investment. In an MBO or MBI, management stands alongside the investor as a buyer of the business. In secondary and subsequent MBOs, management additionally appears in the role of seller. For further information, see Practice Note: Buyouts...

This glossary sets out many of the expressions commonly used in the leveraged finance market. Words appearing in the definitions in bold are defined elsewhere in this glossary. For further banking terminology, please refer to the main Banking & Finance Glossary... Acquisition finance glossary—A Acceleration Acceleration is the formal action taken by the agent, on the instructions of the majority lenders, following an event of default, such as making a demand for early repayment of the loan. See Practice Note: Accelerating a loan for more information... Accordion feature/accordion facility An accordion, also called an incremental debt feature, is a mechanism in the facilities agreement that, provided specified conditions are satisfied (for example, pro forma compliance with a leverage test), permits those lenders under the facilities agreement who wish to do so to advance additional debt. The terms for that extra debt are typically captured in an increase notice. This accordion or incremental debt flexibility is different from structural adjustment, which usually requires the majority consent...