Commentary

D6.435 MBOs—Introduction

Corporate tax
Corporate tax | Commentary

D6.435 MBOs—Introduction

Corporate tax | Commentary

Management buy-out

D6.435 MBOs—Introduction

A management buy-out (MBO) occurs when the management team of an existing company purchase that company. They will typically establish a new company (Newco) which will subsequently acquire their employer's business or company (Target).

An MBO can be structured in one of the following three main ways:

  1.  

    (a)     as a 'share' deal, where Newco acquires Target's share capital

  2.  

    (b)     as an 'assets' deal, where Newco acquires the trade and assets of Target, or

  3.  

    (c)     as a 'hive down' (see D6.315–D6.331). In this case, the Target business is transferred to a new subsidiary of that company (Hiveco)

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