Management buy-in

For the following question, I do not fully understand the meaning behind “capable managers.”

Q) A leveraged buyout fund is evaluating Company A relative to its peer companies. Comp A is most likely a good candidate for a mgmt buy-in if it has:

A) higher cash flow and less capable managers than its peers.

  • In management buy-in, is it Company A’s management buying in? If so, then the the management is “less capable” than its peers so shouldn’t more qualified people take over? I’m guessing that management buy-in is a 3rd party?

Management buy-in is when a third party or outside management replaces the current management. In this case, it qualifies as the company has less capable managers than its peers.

In this situation buying company feels that the company has a very good potential but they has a less capable managers. They change the management after buying in.