When Managers Are Owners

Leveraged buyouts come in many different varieties. In some cases, corporate raiders snap up a company with borrowed money, then throw out the management, dismember the firm and sell off the pieces. But in other deals, including the proposed buyout of RJR Nabisco, the managers initiate the action. In one of the least controversial types of management buyouts, the executives of a particular division buy it from a larger parent company. These managers are out to prove they can run their own show -- and run it better than some sprawling conglomerate that has grown inattentive or slothlike in responding to...

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