Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Buyout definition

What does Buyout mean? In corporate practice, a buyout is the acquisition of a company or of a controlling interest in its shares, giving the buyer effective control of the target. It is a market term used in M&A and private equity rather than one defined by statute or case law. Common forms are the management buyout (MBO), where existing managers take control (often with private equity funding), and the leveraged buyout (LBO), where a sponsor acquires control using significant third‑party acquisition debt, typically secured on the target group. Other variants include management buy‑in (MBI), secondary buyouts between sponsors, carve‑outs...

UK MBOs and MBIs: management warranties, disclosure, equity terms, directors’ and employment duties, conflicts, governance and liability

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Practice notes

Management’s position in a management buyout (MBO) or management buy‑in (MBI) is frequently characterised by tension and potential conflict: on one side they act as owners and participants in the target enterprise, while on the other they remain employees and officers subject to the control and employment of the primary backer (ie the private equity fund). For management, an MBO or MBI is an appealing way to obtain finance to expand an existing business and to capture the rewards of that expansion as part‑owners of the business. Nevertheless, there are meaningful risks for management, both at the initial investment phase and throughout the life of the investment. In an MBO or MBI, management stands alongside the investor as a buyer of the business. In secondary and subsequent MBOs, management additionally appears in the role of seller. For further information, see Practice Note: Buyouts...

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Web page updated on 22/05/2026

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