A management buy-out is defined as:
A)Severance payments made by an acquiring firm to target firm managers.
B)Firm shareholders paying off management so that it can be replaced.
C)A buy-out in which the purchasers are a firm's managers.
D)None of the above.

Question

Quizplus · Accepted Answer

A management buy-out is a type of corporate finance transaction in which the managers of a company purchase the company from its current owners, usually with the help of external financing. This differs from option A, which describes severance payments, and option B, which describes a scenario where shareholders are paying off management to be replaced. Option D is incorrect because one of the options must be correct.

A Management Buy-Out Is Defined As