What occurs during a management buyout?

A management buyout is a process in which the current managers of a company acquire a significant portion of the company, often with the intention of taking it private or ensuring that the managerial team maintains control over the business. This usually involves the employees or managers pooling their resources to purchase the company from its current owners or shareholders.

In this context, the answer that states employees purchase the company from owners accurately captures the essence of what a management buyout entails. The managers, who are already involved in the operations and strategic decisions of the business, leverage their knowledge and experience in the organization to facilitate the purchase. This can lead to a more aligned management structure, as those in control have a vested interest in the success of the company.

Other options do not accurately reflect the mechanics of a management buyout. External managers taking over refers to a different scenario where outside individuals assume leadership roles, which is not the focus of a management buyout. Selling off company assets typically suggests a liquidation process rather than a buyout, and shared ownership is usually associated with equity financing rather than the exclusive managerial control that characterizes a management buyout. Therefore, the answer that identifies employees purchasing the company encapsulates the core concept of a management buyout clearly and succinctly.