Publications
Publications
- winter 1988
- California Management Review
Management Buyouts and Managerial Efforts
By: Robert F. Bruner and Lynn S. Paine
Abstract
Management buyouts, which have played an important role in the recent wave of corporate restructurings, have been criticized from several directions. This article addresses the problems created by management's conflict of interest. As members of the buyout team, managers have strong incentives to act in their own self-interest, yet they have a fiduciary duty to promote shareholders' interests. The conflict of interest inherent in management buyouts can be dealt with through a system of disclosure and review provided that management, board members, shareholders, and judges apply an appropriate standard of fair price. The authors propose a standard of fairness, the "synthetic MBO standard," based on the implications of management's fiduciary duties in the buyout context. They recommend that the disclosure requirements of the federal securities laws be modified to include disclosure of a company's value under this standard.
Keywords
Citation
Bruner, Robert F., and Lynn S. Paine. "Management Buyouts and Managerial Efforts." California Management Review 30, no. 2 (winter 1988): 89–106.
About The Author
