Andrew Tuch, ‘Managing Management Buyouts: A US-UK Comparative Analysis’

ABSTRACT
This chapter comparatively assesses US and UK 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 US and UK corporate fiduciary duties for self-dealing. The UK no-conflict rule is seen as strict, the US 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 UK 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 UK Takeover Panel, stronger shareholder rights, and potentially greater monitoring by institutional investors.

Tuch, Andrew F, Managing Management Buyouts: A US-UK Comparative Analysis (April 30, 2020) in Research Handbook on Comparative Corporate Governance (Afra Afsharipour and Martin Gelter eds, Edward Elgar Publishing, forthcoming); Washington University in St Louis Legal Studies Research Paper No 20-04-02.

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