buy out


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Related to buy out: Management buy out

Buyout

1. An investment in which an entire company, or, more commonly, the controlling interest in the company, is sold. For example, if Jack and Frank each own a 50% stake in a mechanic shop, Frank may conduct a buyout by purchasing Jack's half of the company. In publicly-traded companies, buyouts are usually acquisitions by another company. However, a single investor may buy out a publicly-traded company; one calls this "going private." Other types of buyouts include venture capital buyouts or management buyouts. See also: Friendly takeover, Hostile takeover.

2. In a contract, the act of one party paying a fee to the other party to end the contract before its completion. The term especially applies to employer-employee contracts. See also: Break fee.

buy out

1. To purchase all the stock of a company or all the stock of a company owned by one investor or by a group of investors. For example, corporate management may decide to buy out an investor in order to halt a potential takeover.
2. To terminate a contract before its scheduled termination date by reaching a monetary agreement satisfactory to the parties involved.