buy·​out | \ ˈbī-ˌau̇t How to pronounce buyout (audio) \

Definition of buyout

 (Entry 1 of 2)

1 : an act or instance of buying out
2 : a financial incentive offered to an employee in exchange for an early retirement or voluntary resignation

buy out

bought out; buying out; buys out

Definition of buy out (Entry 2 of 2)

transitive verb

1 : to purchase the share or interest of
2 : to purchase the entire stock-in-trade and the goodwill of (a business)

Examples of buyout in a Sentence

Recent Examples on the Web: Noun

The Fire’s proposed return to Soldier Field moved forward slightly Wednesday after more details of the potential buyout of their lease at SeatGeek Stadium were revealed at a Bridgeview village board meeting. Jeremy Mikula,, "Fire edge closer to buying out their lease at SeatGeek Stadium for a proposed $65.5 million," 3 July 2019 The Ducks have cap space but have historically operated well under the limit, and they are hindered by the recent buyout of Corey Perry that will force them to pay $5 million in the 2020-21 season. Curtis Zupke,, "Kings and Ducks won’t be seeking big names during NHL free agency," 30 June 2019 The land — a total of 39 lots — is part of the Imperial Estates subdivision, which was part of a buyout by the city of Friendswood and the drainage district in 2001 after Tropical Storm Allison flooded the area. Yvette Orozco, Houston Chronicle, "Friendswood drainage work displaces popular disc golf course," 26 June 2019 The pastor took a buyout from the department and no longer works with the Knox County Sheriff's Office. Fox News, "Cracker Barrel bars church from hosting event after pastor said gay people should be executed," 19 June 2019 Grafton, another small Illinois community, has eschewed levees in favor of buyouts and a slow, piecemeal retreat to higher ground. Tristan Baurick,, "For some Mississippi River cities, there are only 2 choices — adapt or move: The River’s Revenge," 15 June 2019 FitzSimons, who received $50 million through stock sales and incentives in the buyout, according to court documents, also declined to comment on the settlement agreement. Robert Channick,, "Ten years after Tribune Co. 'deal from hell,' Zell and other former execs agree to pay $200 million to settle leveraged buyout lawsuit," 14 June 2019 Crushed by debt, Beatrice was later sold off in a huge leveraged buyout. Raymond Zhong, New York Times, "Samsonite C.E.O. Resigns After Accusation of Résumé Fraud," 1 June 2018 This is corporate raiding of the 1980s variety—but it’s being done more quietly now, with staid professionals overseeing the takeovers instead of the more flamboyant leveraged buyouts of the Reagan years. Alex Shephard, The New Republic, "The Real Retail Killer," 28 Mar. 2018

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'buyout.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

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First Known Use of buyout


1907, in the meaning defined at sense 1


1598, in the meaning defined at sense 1

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Statistics for buyout

Last Updated

14 Jul 2019

Look-up Popularity

Time Traveler for buyout

The first known use of buyout was in 1598

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More Definitions for buyout



Financial Definition of buyout

What It Is

A buyout is the purchase of at least 51% of a company. Under a buyout, the previous ownership loses control over the company in exchange for compensation.

How It Works

The buyout process usually begins when an interested purchaser or group of purchasers makes a formal buyout offer to a company's board of directors, who are the representatives of the company's shareholders. Negotiations and/or a tender offer ensue, and the board of directors eventually either recommends that the shareholders sell their shares to the purchaser or discourages the shareholders from doing so. Company managers and directors do not always welcome buyout offers, but because the shareholders ultimately decide whether to sell the company, people consider some buyouts hostile and others friendly. Regardless, the purchaser usually pays a premium for shares that give it controlling interest in a company.

Companies, private individuals, private equity firms, pension funds, lenders, and other institutions usually conduct or supply the money for buyout transactions. Companies that specialize in buyouts (buyout firms) exist solely to fund and facilitate buyouts, and they may act alone or together on a deal. They usually get their money from institutional investors, wealthy individuals, or loans.

Buyout firms usually seek out and purchase underperforming or undervalued companies in order to "fix" them and sell them or take them public many years later. When it sells one of its companies, the buyout firm takes a commission, which it passes on to its investors. Buyout firms are also often involved in management buyouts, which are buyouts conducted by the management of the company being purchased, and they often play key roles in leveraged buyouts, which are buyouts that are funded with borrowed money.

Why It Matters

Buyouts occur for several reasons. Some occur because the purchaser believes a company's assets are undervalued and can be resold for a profit. Others occur because the purchaser believes it will receive financial and strategic benefits from the buyout such as higher revenues, easier entry into new markets, less competition, or improved operational efficiency. Ultimately, nearly all buyouts occur because the purchaser believes it can provide more value to a company's shareholders than the company's current management can.

Source: Investing Answers



English Language Learners Definition of buyout

: the act of gaining control of a company by buying the parts of it you do not own


buy·​out | \ ˈbī-ˌau̇t How to pronounce buyout (audio) \

Legal Definition of buyout

 (Entry 1 of 2)

: an act or instance of buying out

buy out

transitive verb

Legal Definition of buy out (Entry 2 of 2)

1 : to purchase the share or interest of
2 : to purchase the entire tangible and intangible assets of (a business)

More from Merriam-Webster on buyout

Rhyming Dictionary: Words that rhyme with buyout

Nglish: Translation of buyout for Spanish Speakers

Comments on buyout

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to form ideas or theories about something

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