Structure, Strategy and the MBO Life Cycle

Abstract

MBOs, through divestment, frequently attempt strategic and other business changes within the first few months of their existence. The need for a rapid turnaround; an increase in autonomy following the cut in the umbilical cord to an often ailing parent; the increase in gearing; the (hopefully) agreed preferences of institutional share-holders; the attitudes of employees, creditors and other stakeholders; the circumstances in which the buyout came into being; the hive down in assets or business taken through the buyout; and the motivating and incentive effects of personal ownership; all create a context for rationalisation (a change of degree), or a strategic redeployment of assets or redirection (a change of kind).