LBOs often occur because managers are not maximizing shareholder value.

Question

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LBOs (leveraged buyouts) can occur when managers are not maximizing shareholder value because private equity firms may see potential to increase value through changes in strategy, cost-cutting measures, or other operational improvements that the current management team has not pursued. The goal of a LBO is typically to increase shareholder value by making changes that the current management team has not been able to achieve.

LBOs Often Occur Because Managers Are Not Maximizing Shareholder Value