Institutional Buyout - IBO

AAA

DEFINITION of 'Institutional Buyout - IBO'

When an institutional investor, such as a private equity firm or a venture capitalist firm, acquires a controlling interest in a separate company. Institutional buyouts are the opposite of management buyouts (MBO), in which a business's current management acquires a large part of the company. Typically, the investor in an IBO will look to dispose of its stake in the company within a certain time frame.

INVESTOPEDIA EXPLAINS 'Institutional Buyout - IBO'

An institutional buyout can also involve instances where a private equity firm acquires a company and keeps the current management or hires new managers and gives them stakes in the business. In general, the private equity firm involved in the IBO will take charge in structuring and exiting the deal as well as hiring managers.

RELATED TERMS
  1. Management Buyout - MBO

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

    The purchase of a company's shares in which the acquiring party ...
  3. Employee Buyout - EBO

    A restructuring strategy in which employees buy a majority stake ...
  4. Employee Stock Option - ESO

    A stock option granted to specified employees of a company. ESOs ...
  5. Investment

    An asset or item that is purchased with the hope that it will ...
  6. Roll-Up Merger

    A rollup (also known as a "roll up" or a "roll-up") ...
Related Articles
  1. Understanding Leveraged Buyouts
    Fundamental Analysis

    Understanding Leveraged Buyouts

  2. Finding The Best Buyer For Your Small ...
    Entrepreneurship

    Finding The Best Buyer For Your Small ...

  3. How The Big Boys Buy
    Retirement

    How The Big Boys Buy

  4. Use Breakup Value To Find Undervalued ...
    Investing

    Use Breakup Value To Find Undervalued ...

comments powered by Disqus
Hot Definitions
  1. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  2. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  3. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  4. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
  5. Gresham's Law

    A monetary principle stating that "bad money drives out good." In currency valuation, Gresham's Law states that if a new ...
  6. Limit-On-Open Order - LOO

    A type of limit order to buy or sell shares at the market open if the market price meets the limit condition. This type of ...
Trading Center