What is a buyout?
A buyout is the acquisition of a controlling stake in a company — buying out existing owners rather than injecting new growth capital. It is the defining transaction of private equity: the buyer takes control, often reshapes management and strategy, and aims to exit at a higher value within a defined horizon.
Main flavours
In a leveraged buyout (LBO) the purchase is financed largely with debt secured against the target’s own cash flows. A management buyout (MBO) has the existing management team as buyer, usually backed by a fund; a management buy-in (MBI) brings in outside managers. In venture contexts, “buyout” also appears in shareholders’ agreements as a buyout clause — a mechanism forcing or permitting the purchase of a shareholder’s stake on trigger events such as death, deadlock, or a founder leaving (see bad leaver).
What actually gets negotiated
Price is only the headline. The real work sits in valuation mechanics (locked box vs. completion accounts), representations and warranties with indemnity caps and baskets, management rollover and incentive packages, non-competes, and — in leveraged deals — how much debt the target itself can lawfully support. Under Turkish law, financial assistance and capital maintenance rules (TTK m. 380) constrain classic LBO structures where the target secures acquisition debt, so Turkish buyouts are often structured through holding-company mergers or carefully sequenced refinancings.
Buyout vs. acquisition — is there a difference?
Every buyout is an acquisition, but the term signals control changing hands away from incumbent owners, typically with financial-sponsor involvement and leverage — as opposed to a strategic merger or a minority growth investment.
What is a buyout clause in a shareholders’ agreement?
A contractual right or obligation to purchase a shareholder’s stake at a pre-agreed price or formula when defined events occur. It prevents a departed or deadlocked shareholder from freezing the company.
Related: drag-along, due diligence.