Birley, S., Muzyka, D., & Hay, M. (1999). Management buyout: Perception of opportunity - A research note. The Journal of Management Studies, 36(1), 109.

Question 1

What is a management buyout (MBO)?

Answer 1

An MBO is a corporate finance transaction where the management team of an operating company acquires the business by borrowing money to buy out the current owner(s).

Question 2

What two basic assumptions do studies on venture capitalists tend to incorporate?

Answer 2

1. Individual investors have a checklist which consits of a hierarchy of decision criteria

Venture capitalists would prefer to select an opportunity which offers a good management team, reasonable financial and product-market characteristics, even if the opportunity does not meet the overall fund requirements

2. The investment criteria used are the same for all types of investments

Question 3

What is the core question regarding this paper?

Answer 3

What are the key criteria used by venture capitalists in evaluating potential management buyout investments, and are they consistent with those found in previous studies of venture capital criteria?

Question 4

What do MBO investors value in?

Answer 4

a. the business opportunity
b. the mbo team leader
c. the mbo team

Question 5

What characteristics does a team leader have?

Answer 5

leadership style, decision style, vision and values, business skills, people skills, personal skills

Question 6

What characteristics does a team have?

Answer 6

demography, intra-team relations, effectiveness, team decision-making

Question 7

What are 2 management buyout investment criteria?

Answer 7

1. Leadership capability of the team
2. Track record of the team (past performance, achievements)

Question 8

What are important team characteristics to venture capitalists?

Answer 8

1. Overall shown effectiveness
2. Ability to lead the firm
3. Ability to produce profits
4. Success in managing conflicts
5. Level of inherent trust within the team