Skip to content

CA Final · Advanced Financial Management · Mergers, Acquisitions and Corporate Restructuring

In a management buyout (MBO), which feature most directly distinguishes it from a general leveraged buyout by a financial sponsor?

An MBO is distinguished by the fact that the existing management team is the buyer or a key member of the buying group, typically using borrowed funds and outside investors, rather than an external financial sponsor acting alone.

  1. AThe existing management team is the acquirer or a principal participant in the buying groupCorrect
  2. BThe purchase is always financed fully by equity
  3. CThe target must be a listed company
  4. DThe acquirer must be a foreign company

Explanation

An MBO is a buyout in which the existing managers acquire the business, often with financing from lenders or private equity. It need not be all equity, listed or foreign.

Did you get it right without looking?

One question tells you little. A timed set on Mergers, Acquisitions and Corporate Restructuring shows your real accuracy, how long you take and where you lose marks.

Practise Mergers, Acquisitions and Corporate RestructuringFree diagnostic mock

More Mergers, Acquisitions and Corporate Restructuring questions