Jurisdiction(s):
United Kingdom

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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...

Management buyouts: UK tax reliefs for management—interest relief on acquisition loans, EIS restrictions and business asset disposal relief (BADR) (including 2025–26 rate changes)

Published by a LexisNexis Tax expert

Practice notes

FORTHCOMING CHANGE relating to the rates of business asset disposal relief (BADR):

Further to announcements made at the Autumn Budget 2024, the rate of capital gains tax applying to disposals qualifying for business asset disposal relief (BADR) will rise to 18% for disposals on or after 6 April 2026 (matching the lower main capital gains tax rate), having increased to 14% (up from 10%) in relation to disposals made on or after 6 April 2025. Legislation for these changes was included in the Finance act 2025.

The success of a management buyout (commonly referred to as an ‘MBO’) will usually be heavily dependent on the performance of the management team running the company. The private equity investor backing the MBO will therefore seek to incentivise the management team and ensure that management interests are aligned with those of the investor. This can be achieved where management invest in the target business by subscribing for shares in the top company of the acquiring group (Newco 1)...

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Web page updated on 21/05/2026

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