What does buyout mean?
A buyout is the acquisition of complete or controlling ownership of a company, or of another party's stake in a shared venture. The term is central to corporate finance: when investors, rival firms, or a company's own managers purchase enough equity to take charge, the transaction is described as a buyout. Common varieties include the leveraged buyout, financed heavily with borrowed money, and the management buyout, in which existing executives acquire the business they run. Buyouts can also occur on a smaller scale, as when one partner buys out the other's interest in a jointly owned shop or practice. The word carries a formal, commercial tone and appears almost exclusively in business, legal, and financial reporting. Because buyouts reshape ownership and often trigger restructuring, job changes, or strategic shifts, the term frequently appears in headlines about mergers, acquisitions, and corporate takeovers, making it essential vocabulary for following economic news.
The purchase of a company's entire ownership or a controlling interest in it, especially by buying its shares or assets.
"The private equity firm announced a $2 billion buyout of the software company."
Frequently preceded by modifiers such as "leveraged," "management," or "hostile."
The purchase of one person's or party's share in a jointly owned enterprise by another party.
"He offered his brother a fair price to buy out his half of the hardware store."
Standard plural; used when discussing multiple transactions, as in financial reporting.
"Leveraged buyouts surged across the sector during the low-interest-rate years."
Some of history's most famous corporate raids were leveraged buyouts — deals bought with borrowed money and paid for with the target company's own assets.
Reviewed by Deb Chak, Editor. AI-assisted content curated by RJS Tech Solutions LLP.
Etymology of buyout
Buyout is a compound of the native English verb "buy" and the adverbial particle "out," formed on the model of phrasal-verb nouns like "checkout" and "layout" that became established in American English during the nineteenth century. Its root, "buy," descends from Old English "bycgan," of Germanic origin, which also yields "buyer" and related trading terms. As corporate takeovers grew prominent in twentieth-century American finance, "buyout" narrowed to its now-dominant sense of acquiring control of a company.
Related word forms
How buyout is actually used
"Buyout" is chiefly used in business, finance, and legal contexts, so it carries a formal, commercial register. It is often modified by terms specifying how it is financed or who conducts it: "leveraged buyout" (funded largely by debt), "management buyout" (led by the company's own executives), and "employee buyout." In casual speech about partnerships or ventures, "to buy out" someone is also expressed as the verb phrase "buy out," from which the noun derives.
Easily confused with buyout
A buyout is the purchase of a company or stake by an acquirer, whereas a bailout is financial rescue support (typically government-provided) to prevent collapse.