Aqa~Unit 6~Business Studies~Official

Management buyouts are simply when managers of a firm decide to buy its shares so that they actually own the business. The implications include: higher motivation for the managers because the success or failure of the business now has a bigger impact on them. Also they get to make all the decisions and owning the shares in the business means they keep all of the profits too. The major downside is that in order to finance buyouts, it you usually requires heavy borrowing. Therefore the high gearing ratio could have a major impact on the profitability of the business due to the high interest repayments. Its fairly simple topic. Does that help?

ok no probs .. I am dreading this exam, hope it will be better than unit 4..

Wat's MBO ( management buyout)? and wat are its implications? anyone knows? make it simple plz , my text book explains in complex way

I need about 90 ums marks to get an A overall in this exam argggg scarey!

Management buy out is when the managers of a business take it over by buying a controlling interest in its shares. It might happen when the original owners feel the performance of this firm is likely to decline in the future - but the managers believe it can be successful.

However, managers will need to finance a buy out - so may have to borrow money as it is unlikely that they have enough personal funds to deal themselves.

Buy outs = high gearing (loans) and high interest payments. This can put pressure on the managers to ensure the firm performs well to cover these costs.

Buy outs are also stressful. By taking over the firm, managers will become totally responsible for the success/failure of the firm. They must take all decisions and if the business does fail they will personally lose money.

So overall:

Advantages
- managers role has changed, more control and therefore higher profits (if successful)
- If business is successful they'll keep the rewards - this is motivating

Disadvantages
- Need money to finance buy out
- means high gearing, and high interest payments
- if it fails, managers will lose personal money
- stressful

Not sure what else sorry!

can someone tell me the problems of growth?

like the factors

diseconomies of scale
culture clash
alienation
demotivation

thanks

Same here I need to get an A in this exam to push my grade up to B overall in A level.. but I got a feeling it won't happen.. so far I messed up two units, unit 3 which i got a C in , I retook it last month and messed it up competely cos I didn't revise for it , and unit 4 It was a crap one .. am hopping I will do good in unit 6!!

management buyout is when the managers of the business buy the business via their own money or bank loans due to the fact that managers feel that the business could be successful if funds were not be directed to other parts of an organisation. Another reason for it might be due to the owner of the business retiring and wantin the company to stay in the local community.

Rewards:

May increase motivation of staff as they will often have shares in the businses as another means to raise finance and as a result want the company to be successful

May become very profitable now that funds are not bein diverted away from one part of the business


Negative affects:

the business may be fundermently unprofitable and thats why one business sold it to start off with

will often result in rationalistaion and as a result decrease motivation of the staff and decrease productivity

Conclusion:

if a management buyout is successful it is normally only the managers that are benefit however if its unsuccessful both emplolyees and manager feel the burden of failure

Good luck! It sucks doesn't it. My Unit 1 mucked my chances up, got a D first time, and E the next time and hopefully this time I've done..better

Hopefully we'll both do amazingly awesome in this one and get full marks!! haha.

no its cool, i can do that

does anyone know what mainstream is?

Hope so ! and gud luck to u too!!