Buyout

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Dictionary Says

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 Says

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 Definitions

  • Management Buyout - MBO

    When the managers and/or executives of a company purchase controlling interest in a company from existing shareholders.
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  • Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the acquiring company will make an offer for the outstanding shares.
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  • Target Firm

    A company which is the subject of a merger or acquisition attempt. A takeover attempt can take on many different flavors, depending on the attitude of the target firm toward the ...
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    • Discounts For Lack Of Marketability - DLOM

      A method used to help calculate the value of closely held and restricted shares. The theory behind DLOM is that a discount exists between the value of a company's stock that is and is ...
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    • Employee Buyout - EBO

      A restructuring strategy in which employees buy a majority stake in their own firms. This form of buyout is often done by firms looking for an alternative to a leveraged buyout. ...
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    • Secondary Buyout

      A type of leveraged buyout in which a financial sponsor or private equity firm sells its investment in a company to another financial sponsor or private equity firm, thereby ending its ...
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    • Friendly Takeover

      A situation in which a target company's management and board of directors agree to a merger or acquisition by another company. In a friendly takeover, a public offer of stock or cash is ...
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    • 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 ...
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    • Takeout

      A slang term denoting the purchase of a company through an acquisition, merger or other form of buyout. A takeout can refer to a hostile takeover, a friendly merger, or a leveraged or ...
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    • Competitive Advantage

      An advantage that a firm has over its competitors, allowing it to generate greater sales or margins and/or retain more customers than its competition. There can be many types of ...
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