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The management buy-out arena: differential slip in a tripartite alliance

Research output: Contribution to journalJournal article

Published
<mark>Journal publication date</mark>01/2002
<mark>Journal</mark>Strategic Change
Issue number1
Volume11
Number of pages10
Pages (from-to)7-16
Publication statusPublished
Original languageEnglish

Abstract

The traditional focus on Management Buy-Outs (MBOs) has been upon concluding deals. However, substantial numbers of MBOs fail to exit and this paper suggests that the time is ripe for attention to be redirected towards post-deal evolution.

Three phases in the MBO post-deal process are identified. These are depicted as The Spirit of Optimism, The Zone of Indifference and The Spiral of Mistrust, reflecting, respectively, the moment of contractual agreement, subsequent stagnation and downward slide in performance.

As the MBO evolves through these phases of decline, this study focuses upon the interactions of three main parties: The Management Team, The Venture Capitalists and The Investment Bankers. The key objective is to capture the difficulties accruing to these parties as the MBO declines.

The failures of the three main parties lie in identities, increasing problems of interaction and lack of communication. By linking micro, meso and macro levels of analysis a novel way of looking at MBOs is suggested which helps to avoid the trap of focusing only upon the moment the deal is done.