buy out

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Related to buy out: Management buy out


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.