UK Accounting Glossary
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.
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.
To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.
Definitions for Buyout are sourced/syndicated and enhanced from:
This glossary post was last updated: 4th February 2020.