A buyout transaction, in corporate finance and private markets, is the purchase of a controlling interest in a company, after which the buyer directs its strategy and management. The buyer is usually a private equity fund, alone or with the company's managers. The target may be a private business, a division sold by a larger group, or a listed company taken private.
The best-known form is the leveraged buyout (LBO), in which a large part of the price is paid with borrowed money secured on the target's own assets and cash flow. Where existing managers lead the purchase, it is a management buyout; where an outside team does so, it is a management buy-in. The buyer aims to increase the value of the business over several years and then sell it, list it or pass it to another fund, sometimes through a secondary fund transaction. Buyouts differ from growth equity, which takes minority stakes.