Vanderbilt Law Review Volume 41 Issue 2 Issue 2 - March 1988 Article 1 3-1988 Management Buyouts: Creating or Appropriating Shareholder Wealth? Dale A. Oesterle Jon R. Norberg Follow this and additional works at: https://scholarship.law.vanderbilt.edu/vlr Part of the Law Commons Recommended Citation Dale A. Oesterle and Jon R. Norberg, Management Buyouts: Creating or Appropriating Shareholder Wealth?, 41 Vanderbilt Law Review 207 (1988) Available at: https://scholarship.law.vanderbilt.edu/vlr/vol41/iss2/1 This Article is brought to you for free and open access by Scholarship@Vanderbilt Law. It has been accepted for inclusion in Vanderbilt Law Review by an authorized editor of Scholarship@Vanderbilt Law. For more information, please contact
[email protected]. VANDERBILT LAW REVIEW VOLUME 41 MARCH 1988 NUMBER 2 Management Buyouts: Creating or Appropriating Shareholder Wealth? Dale Arthur Oesterle* and Jon R. Norberg** I. INTRODUCTION .......................................... 208 II. MANAGEMENT BUYOUTS ................................. 215 A. The Environment and Mechanics of Management B uyouts ....................................... 215 B. The Potential for Abuse ........................ 218 C. Explaining the Premium Price in Management B uyouts ....................................... 222 III. COURT REGULATION OF MANAGEMENT BUYOUTS ......... 234 A. Removing Barriers to Price Competition ......... 236 B. The Independent Negotiating Committee ........ 241 C. The Management Buyout Group's Obligation to Disclose its Reservation Price ................... 244 IV. BETTER METHODS OF PROTECTING TARGET SHAREHOLDERS 249 A. Increasing the Accountability of Investment Advi- sors ........................................... 249 B. Strengthening the Independent Negotiating Com- mittee Versus Requiring More Disclosure by the Buyout Group ................................. 255 V. CONCLUSION ............................................ 259 * Professor of Law, Cornell Law School. ** Member, Minnesota Bar. 208 VANDERBILT LAW REVIEW [Vol.