Buy, Strip And Flip


DEFINITION of 'Buy, Strip And Flip'

When a private equity firm buys out a target firm (usually with a leveraged buyout) and then sells the target firm in an IPO within a relatively short period of time. Along the way, the private equity firm may take out loans to make special dividends or carry out other actions to improve its own financial situation.

BREAKING DOWN 'Buy, Strip And Flip'

Private equity firms typically own and manage a target firm for a number of years. In this time, the company's management and financial situation are improved before the private equity firm cuts the newly-successful company loose with an IPO, at which time the private equity firm earns a nice return for all its work.

In the buy, strip and flip situation, purchased firms are held for only a year or two before the IPO. This usually means that the firm's financial situation is virtually unchanged and, as a result, most of these IPOs do not perform very well.

  1. Acquisition

    A corporate action in which a company buys most, if not all, ...
  2. Takeover

    A corporate action where an acquiring company makes a bid for ...
  3. Private Equity

    Private Equity is equity capital that is not quoted on a public ...
  4. Leveraged Buyout - LBO

    The acquisition of another company using a significant amount ...
  5. Initial Public Offering - IPO

    The first sale of stock by a private company to the public. IPOs ...
  6. Target Firm

    A company which is the subject of a merger or acquisition attempt. ...
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