| Commentary

145 Introduction

| Commentary

E: PRIVATE EQUITY FINANCE AND MANAGEMENT BUY-OUTS

1: OVERVIEW OF PRIVATE EQUITY FINANCE AND MANAGEMENT BUY-OUTS

145 Introduction

The use of private equity in the financing of takeovers is seen in a management buy-out. In essence, a management buy-out is a transaction in which the ownership of a business passes out of its existing ownership to its managers in whole or in part. A common feature is that there will be three parties: the sellers, the managers and the party providing the equity finance for the purchase.

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