Buyout

AAA

DEFINITION of '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 inorganically growing a business.

INVESTOPEDIA EXPLAINS 'Buyout'

A leveraged buyout is accomplished by borrowed money or by issuing more stock. Buyout strategies are often seen as a fast way for a company to grow because it allows the acquiring firm to align itself with other companies that have a competitive advantage in a specific area.

RELATED TERMS
  1. Management Buyout - MBO

    A transaction where a company’s management team purchases the ...
  2. Takeover

    A corporate action where an acquiring company makes a bid for ...
  3. Secondary Buyout

    A type of leveraged buyout in which a financial sponsor or private ...
  4. Discounts For Lack Of Marketability ...

    A method used to help calculate the value of closely held and ...
  5. Employee Buyout - EBO

    A restructuring strategy in which employees buy a majority stake ...
  6. Target Firm

    A company which is the subject of a merger or acquisition attempt. ...
RELATED FAQS
  1. How does lack of corporate social responsibility hurt a company's bottom line?

    Learn about the perils of a lack of corporate social responsibility. Examine the WorldCom fraud, which led to its bankruptcy ...
  2. A cash buyout agreement has been announced for a stock I own, but why isn't my stock ...

    The announcement of an acquisition or a merger does not necessarily mean that the deal will be resolved as originally stated. ...
  3. What happens to my call options if the underlying company is bought out?

    Typically, the announcement of a buyout offer by another company is a good thing for shareholders in the company that is ...
Related Articles
  1. Fundamental Analysis

    Mergers And Acquisitions: Understanding Takeovers

    In the dramatic world of M&As, battleground terms meld with bizarre metaphors to form the language of the game.
  2. Fundamental Analysis

    Understanding Leveraged Buyouts

    LBOs are often presented as predatory by the media, but it really depends on which side of the deal you're on.
  3. Investing Basics

    The Merger - What To Do When Companies Converge

    Learn how to invest in companies before, during and after they join together.
  4. Bonds & Fixed Income

    What Are Corporate Actions?

    Be a savvy investor - learn how corporate actions affect you as a shareholder.
  5. Mutual Funds & ETFs

    Activist Hedge Funds: Follow The Trail To Profit

    Learn to profit by following the lead of some of Wall Street's most ruthless investors.
  6. Retirement

    How The Big Boys Buy

    Learn what those in-the-know look for when acquiring a company.
  7. Options & Futures

    The Basics Of Mergers And Acquisitions

    Learn what corporate restructuring is, why companies do it and why it sometimes doesn't work.
  8. Bonds & Fixed Income

    Taking Advantage Of Corporate Decline

    A bankrupt company can provide great opportunities for savvy investors.
  9. Investing News

    Sun Pharma And Ranbaxy: An Ideal Pharma Marriage?

    The Sun Pharma merger with Ranbaxy will blend the complementary market strengths and areas of expertise of each company and create a powerful pharma force.
  10. Investing

    Ready To Invest In Financial Leverage Funds?

    Whenever you invest in a leveraged financial fund or are thinking about doing so, it's important to know the risks that could weigh on its returns.

You May Also Like

Hot Definitions
  1. Prepaid Expense

    A type of asset that arises on a balance sheet as a result of business making payments for goods and services to be received ...
  2. Gordon Growth Model

    A model for determining the intrinsic value of a stock, based on a future series of dividends that grow at a constant rate. ...
  3. Cost Accounting

    A type of accounting process that aims to capture a company's costs of production by assessing the input costs of each step ...
  4. Law Of Supply

    A microeconomic law stating that, all other factors being equal, as the price of a good or service increases, the quantity ...
  5. Investment Grade

    A rating that indicates that a municipal or corporate bond has a relatively low risk of default. Bond rating firms, such ...
  6. Fringe Benefits

    A collection of various benefits provided by an employer, which are exempt from taxation as long as certain conditions are ...
Trading Center