MBO
Abbreviation with 2 meanings
| Stands for | Management by objectives |
|---|---|
| Meanings | 2 |
| Categories | Business & Finance |
MBO has two meanings. It stands for Management by objectives (management & strategy) or Management buyout (finance).
Meanings of MBO at a glance
| # | MBO stands for | Context |
|---|---|---|
| 1 | Management by objectives | Business & Finance › Management & Strategy |
| 2 | Management buyout | Business & Finance › Finance |
1. Management by objectives
Business & Finance · Management & Strategy Abbreviations
Management approach in which managers and employees jointly agree on specific objectives, then measure and reward performance against them. The method links individual targets to company goals and was widely adopted by large corporations from the 1960s onward, often forming the basis of annual appraisal systems.
Example: Under the old MBO system, each sales manager negotiated three objectives with the regional director every January.
Peter Drucker popularized the term in his 1954 book The Practice of Management. Critics, including W. Edwards Deming, argued that rigid objective-based appraisal encourages short-term behavior and gaming of targets. In finance, MBO more often means a management buyout, in which executives purchase the company they run; context usually makes the difference obvious.
2. Management buyout
Business & Finance · Finance Abbreviations
Acquisition in which a company's existing managers buy all or most of the business they run, usually with backing from private equity investors and bank debt. MBOs are common in family-business successions and when large groups sell non-core divisions.
Example: The founders sold the logistics arm through an MBO, with the CEO and finance director taking a combined 30 percent stake.
A related form, the management buy-in (MBI), brings in outside managers to buy the company. Because managers have inside information, MBOs raise conflict-of-interest concerns, and listed-company boards usually form independent committees to evaluate them. In management theory, MBO instead means management by objectives.
Related abbreviations
More management & strategy abbreviations
- KRA – Key result area
- KRI – Key risk indicator
- KT – Knowledge transfer
- LOB – Line of business
- MBWA – Management by walking around
- MECE – Mutually exclusive, collectively exhaustive
- MIS – Management information system
- MNC – Multinational corporation
See all 92 management & strategy abbreviations →