Define: Buyout

UK Accounting Glossary

Definition: Buyout


Quick Summary of Buyout


The purchase of a controlling share in a company.



What is the dictionary definition of Buyout?

Dictionary Definition


finance The acquisition of a controlling interest in a business or corporation by outright purchase or by purchase of a majority of issued shares of stock.


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Full Definition of Buyout


A buyout is an investment transaction in which a company or a controlling interest in the company’s shares, is purchased. A leveraged buyout (LBO) is a form of a buyout using borrowed money to purchase a company’s shares, with the company’s assets used as security for the loan. A financial sponsor executes a leveraged buyout to gain control of a majority of a company’s shares using debt, to avoid committing a large amount of capital. A management buyout (MBO) is a form of a buyout where management of a company purchases a controlling interest in the company from existing shareholders and takes the company private. By gaining ownership through a buyout, management has the control needed to grow the business. An employee buyout is the purchase of a majority interest in a company by the company’s employees, often through an ESOP structure. A buyout may also be a transaction in which employees of a company are offered financial incentive to take early retirement. For example, a distressed company may offer to buyout a significant number of its hourly workers to accelerate plans to cut costs by reducing its workforce.


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https://payrollheaven.com/define/buyout/
Modern Language Association (MLA):
Buyout. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. March 30, 2020 https://payrollheaven.com/define/buyout/.
Chicago Manual of Style (CMS):
Buyout. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. https://payrollheaven.com/define/buyout/ (accessed: March 30, 2020).
American Psychological Association (APA):
Buyout. PayrollHeaven.com. Retrieved March 30, 2020, from PayrollHeaven.com website: https://payrollheaven.com/define/buyout/

Definition Sources


Definitions for Buyout are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 4th February 2020.