Buyout

Buyout

A buyout, in finance, is an investment transaction by which the ownership equity of a company, or a majority share of the stock of the company is acquired. The acquiror thereby "buys out" control of the target company.

A buyout can take the form of a leveraged buyout, a venture capital buyout or a management buyout. Where the company being bought out is a public company, a buyout is often called a "going private" transaction.

Non-corporate usage

The term may apply more generally to the purchase by one party of all of the rights of another party with respect to an ongoing transaction between the two. For example:

  • an employer may "buy out" an employee's contract by making a single prepayment, so as to have no ongoing obligation to employ the person;
  • a landlord may buy out the remainder of a tenant's lease, effectively paying them to vacate.

Contracts may have an explicit buyout provision setting forth the terms or price. In the alternative the matter may be negotiated by the parties. If the entire operation is not purchased, the remainder is referred to as a stub.

See also

v · d · eCorporate finance and investment banking
Capital structure Met life tower crop.jpg
Transactions
(terms / conditions)
Valuation

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Look at other dictionaries:

  • buyout — buy·out / bī ˌau̇t/ n: an act or instance of buying out Merriam Webster’s Dictionary of Law. Merriam Webster. 1996. buyout …   Law dictionary

  • buyout — uy out n. (Business, Finance) the acquisition of ownership of a company by purchasing a controlling percentage of its stock. Syn: takeover. [WordNet 1.5] …   The Collaborative International Dictionary of English

  • buyout — two words at first; to purchase someone s estate and turn him out of it, 1640s, from BUY (Cf. buy) + OUT (Cf. out). As one word, the purchasing of a controlling share in a company, from 1976 …   Etymology dictionary

  • buyout — ► NOUN ▪ the purchase of a controlling share in a company, especially by its own managers …   English terms dictionary

  • buyout — [biout΄] n. the outright purchase, usually with borrowed funds, of a business, as by the employees or management …   English World dictionary

  • buyout — purchase of a controlling interest (or percent of shares) of a company s stock. A leveraged buy out is effected with borrowed money. Bloomberg Financial Dictionary This is when a company s management team buys all the company s shares and thereby …   Financial and business terms

  • Buyout — Purchase of a controlling interest (or percent of shares) of a company s stock. A leveraged buy out is done with borrowed money. The New York Times Financial Glossary * * * buyout buy‧out [ˈbaɪaʊt] also buy out noun [countable] FINANCE 1. when a… …   Financial and business terms

  • Buyout — The purchase of a company s shares in which the acquiring party gains controlling interest of the targeted firm. Incorporating a buyout strategy is a common technique used to gain access to new markets and is one of the most common methods for… …   Investment dictionary

  • buyout — UK [ˈbaɪaʊt] / US [ˈbaɪˌaʊt] noun [countable] Word forms buyout : singular buyout plural buyouts business a situation in which the managers or people employed in a company take control of it by buying all of its shares a management buyout See:… …   English dictionary

  • buyout — [[t]ba͟ɪaʊt[/t]] buyouts N COUNT: oft supp N A buyout is the buying of a company, especially by its managers or employees. It is thought that a management buyout is one option …   English dictionary

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