Buyout

The term buyout is used when a party purchases a company’s shares and at the same time gains controlling interest of the firm that is been targeted.  In short, acquisitions by another company are mostly termed as buyouts. Sometimes, buyout also includes purchasing the outstanding debt of the target company and is called ‘referred debt’ by the purchaser. Buyout is usually a common strategy that is mainly used to gain access to markets that are new  and is also one of the most tried and tested methods for growing your business inorganically. You can accomplish a leveraged buyout by borrowing money and also by issuing more stock. The technique of buyout is often useful for a new company to grow in a fast way because it allows them to align themselves with companies having a competitive advantage in a particular field or area. Some other types of buyouts include capital buyouts and management buyouts.

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Edited and Updated 31st May 2014

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