Managing Management Buyouts: A US-UK Comparative Analysis
Research Handbook on Comparative Corporate Governance (Afra Afsharipour & Martin Gelter eds., Edward Elgar Publishing, Forthcoming)
34 Pages Posted: 11 May 2020 Last revised: 16 Jul 2020
Date Written: April 30, 2020
This chapter comparatively assesses U.S. and U.K. law governing management buyouts (MBOs), focusing on the duties of directors and officers in these systems. The analysis casts doubt on persistent but mistaken perceptions about U.S. and U.K. corporate fiduciary duties for self-dealing. The U.K. no-conflict rule is seen as strict, the U.S. fairness rule as flexible and pragmatic. As the analysis for MBOs demonstrates, these fiduciary rules operate similarly, tasking neutral or disinterested directors with policing self-dealing, enabling commercially sensitive responses to conflicts of interest. The analysis also reveals stronger formal private enforcement of corporate law and more robust disclosure rules in the United States. But because the available empirical evidence fails to justify broad claims that corporate fiduciaries’ misconduct is more severe under either regime, the analysis identifies U.K. law-related measures that may serve similar functions to formal enforcement and mandated disclosure in constraining misconduct by corporate fiduciaries. These include informal enforcement by the U.K. Takeover Panel, stronger shareholder rights, and potentially greater monitoring by institutional investors.
Keywords: Management buyout, MBO, public-to-private, P2P, comparative analysis, fiduciary duties, directors and officers
JEL Classification: K22
Suggested Citation: Suggested Citation