What is a “buyout”?
A buyout is the acquisition of a controlling interest in a company — typically by purchasing a majority or all of the equity. Buyouts can be structured as full acquisitions, management buyouts (existing managers acquiring control), leveraged buyouts (debt-financed acquisitions by private equity), or take-privates (acquisition of a public company taking it off the exchange). The buyer becomes the controlling owner; sellers receive cash, stock, or a combination.
Common buyout types
- Strategic buyout: a corporate acquirer purchases for synergies, market expansion or talent.
- Financial buyout / Leveraged Buyout (LBO): a private equity firm purchases primarily with debt; returns come from cash flow plus equity appreciation.
- Management Buyout (MBO): existing management acquires control, often backed by private equity.
- Management Buy-In (MBI): external managers acquire and run a company.
- Founder buyout: founders buy out earlier investors to regain or consolidate control.
Buyout structure
- Purchase price: negotiated based on EBITDA multiple, revenue multiple, DCF, or recent transactions.
- Financing mix: equity (sponsor + management roll), senior debt, mezzanine, sometimes seller financing.
- Earnout: portion of price contingent on post-close performance.
- Closing conditions: regulatory approvals, MAC clause, financing certainty.
Structuring the exit purchase
Buyout mechanics decide whether the deal closes and who bears the risk after it does. The standard architecture: share versus asset purchase (liability inheritance versus cherry-picking, with Turkish asset deals constrained by going-concern transfer rules), price mechanisms (locked box versus completion accounts), and the security package behind the price — escrows and holdbacks sized to indemnity exposure, W&I insurance increasingly replacing seller escrows in larger deals. Management buyouts add their own seams: financing assistance limits, conflicts requiring independent process, and incentive rollovers documented before signing. In leveraged structures, Turkish financial-assistance rules (TTK art. 380) restrict the target funding its own acquisition — a constraint that shapes deal structure earlier than founders expect.