Buyout

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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

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  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?

    The lack of corporate social responsibility at WorldCom led directly to the demise of this multibillion dollar organization. ... Read Full Answer >>
  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. ... Read Full Answer >>
  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 ... Read Full Answer >>
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