The IBO is here, the MBI is back

Article Abstract:

The total value of the 542 deals conducted in the UK buyout market in 1995 was just over five billion pounds sterling. While this total is some way off the record-breaking 7.5 billion pounds in buyout deals attained in 1989, it still holds the distinction of being the second-highest value ever attained. However, unlike 1989 when traditional management buyouts (MBOs) accounted for the bulk of deals, the buyout deals of 1995 were dominated by management buy-ins (MBIs) and investor buyouts (IBOs). Another difference between the two years is that in 1995, there were was little activity involving publicly listed companies going private. Instead, a good amount of the activity centered around buy-ins of strategic divestments and the sale of smaller private companies. Another source of activity was the participation of venture capitalists in deals involving companies with high-growth prospects.

Venture Capital Companies, Miscellaneous Intermediation, Investors, not elsewhere classified, United Kingdom, Economic aspects, Finance, Acquisitions and mergers, Investments, Corporations, Corporations, British

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Loan covenants and relationship banking in MBOs

Article Abstract:

A new study investigates the effectiveness of accounting-based covenants in indicating financial distress in UK management buyouts (MBOs). The nature of the bank/MBO relationship is examined and the influence of a specialist MBO lending unit is analyzed. The findings suggest that the positive use of accounting-based covenants is directly related to the frequency with which they are infringed.

Research, Accounting and auditing, Management buyouts, Managerial accounting

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