| Summary: | Management Buy-Outs occur when the managers of a company buy the
company from its owners, namely the shareholders. Where such a
company is a listed public company, the transaction is known as "going
private. 11 The critics allege that this type of buy-out leads to irreconcilable
conflicts of interests, a breach of fiduciary duties and to insider trading by
the directors. For this reason Management Buy-Outs should be prohibited
or alternatively, regulated to such an extent as to make them virtually
unworkable.
It is submitted that these conflicts are not irreconcilable and that they are no
different to the myriad of other conflicts which arise out of the promotion,
incorporation and the operation of a company. Both statute and the
common law effectively deal with most of the critics' apprehensions without
necessarily prohibiting the transactions giving rise to them. === Private Law === LL.M
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