Buyout
Private Equity glossary · Private Equity Fundamentals
Definition
Acquisition of a controlling interest in a company, typically financed with debt and equity.
Buyout in plain English
A buyout is when an investor buys enough of a company to actually control it — not just a few shares, but the steering wheel. The classic move is to pay for it with a mix of the investor's own money (equity) and a large amount of borrowed money (debt), which is why you'll hear 'leveraged buyout.' It's a bit like buying a rental property with a big mortgage: you put down some cash, borrow the rest, and aim to improve the property and its rent so it's worth more later. Because they own control, buyout investors can push real changes in how the business is run — that's the whole point.
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