Buyout
The purchase of a controlling share in a company, often by its own management or by a private equity firm, typically using a significant amount of borrowed money.
A specific type of acquisition or takeover. It often refers to a 'management buyout' (MBO) or a 'leveraged buyout' (LBO), where the buyers are internal or use substantial debt.
Word relationships
- Takeover: A 'buyout' is a specific type of takeover, often distinguished by who is buying (management, private equity) or how it's financed (leverage).
- Acquisition: A 'buyout' is a form of acquisition, but with specific characteristics regarding the buyer or financing.
- Sell-off: Selling a company or assets, the opposite of buying it.
- IPO (Initial Public Offering): Selling shares to the public, rather than a private purchase of the whole company.
Commonly confused with
- Acquisition: A buyout is a specific method of acquisition, often involving management or significant debt, whereas 'acquisition' is a broader term.
Word family
- buy out (verb): To purchase the entire stock or assets of a company.
Collocations
- leveraged buyout
- management buyout
- successful buyout
- employee buyout
- buyout offer
Example sentences
- "The private equity firm completed a leveraged buyout of the struggling retail chain, hoping to restructure its operations and return it to profitability." Reporting on a private equity deal.
- "The employees initiated a management buyout, pooling their resources to purchase the company from its retiring founder." Discussing employee ownership.
Memory hook
You 'BUY OUT' the previous owners. BUY OUT owners.
When not to use
Do not use 'buyout' for a simple purchase of a company by another large corporation using its own capital, unless it specifically involves the existing management or significant leverage.
Fun facts
- The term 'leveraged buyout' (LBO) became particularly prominent in the 1980s, often associated with corporate raiders and significant debt financing.
Related words
Explore more words
outsourcing, IPO, transaction, Bond, debt, equity
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