Secondary management buy‐outs and buy‐ins
International Journal of Entrepreneurial Behavior & Research
ISSN: 1355-2554
Article publication date: 1 February 2000
Abstract
This paper provides an exploratory examination of the growing phenomenon of secondary management buy‐outs and buy‐ins, where an enterprise having initially been bought out by management is later the subject of a second buy‐out or buy‐in. Such transactions provide a further dimension to the exit opportunities available to venture capital investors and also to the maintenance of independent entrepreneurial businesses. The paper uses large scale data to test propositions relating to the expected differences between secondary buy‐outs and buy‐ins and buy‐outs and buy‐ins in general as well as detailed case study evidence from entrepreneurs and venture capitalists to examine the rationale for such transactions. The quantitative data suggest that secondary buy‐outs and buy‐ins are more likely to involve enterprises in traditional industrial sectors and are significantly more likely to occur a longer time after the initial buy‐out than are trade sales or flotations. The case study evidence reveals that secondary buy‐outs and buy‐ins can arise for various reasons but are rarely the first choice exit route for venture capitalists, though they provide a means by which entrepreneurs can maintain the enterprise’s independent private existence.
Keywords
Citation
Wright, M., Robbie, K. and Albrighton, M. (2000), "Secondary management buy‐outs and buy‐ins", International Journal of Entrepreneurial Behavior & Research, Vol. 6 No. 1, pp. 21-40. https://doi.org/10.1108/13552550010323069
Publisher
:MCB UP Ltd
Copyright © 2000, MCB UP Limited