Jurisdiction(s):
United Kingdom

Key definition

Secondary buyout definition

What does Secondary buyout mean? A secondary buyout is a private equity exit in which a portfolio company (or a controlling stake in it) is sold by one financial sponsor to another sponsor, rather than to a trade buyer or through an IPO. It is a descriptive market term, not defined in legislation or case law, and is used consistently across England & Wales, Scotland, Northern Ireland and Ireland. It can also refer to a sale of a minority stake, for example where one venture capital firm transfers its holding to another. Key legal features typically include: a share sale (often 100%) under a...

UK secondary buyouts in private equity: structures, financing, management consideration, tax issues, transaction steps and exit options

Published by a LexisNexis Tax expert

Practice notes

For both the investing private equity fund and the target’s leadership, the prime lure of a private equity-backed buyout is the chance to crystallise a meaningful gain on exit. There are several potential paths to exit from such an investment, most typically:

a trade sale to another company operating within the same sector,
a flotation (IPO),
or a secondary buyout (SBO).

The ultimate route will hinge on considerations such as public market appetite for a listing and whether credible purchasers are available. Management often influence the decision, and may favour renewed private equity support via an SBO when the business model and prevailing market backdrop align. A secondary buyout (SBO) is, in essence, a private equity-backed acquisition of a company that has already undergone a private equity-backed buyout. In an SBO, the existing private equity owner exits its stake, though the current management team can remain in post afterwards. Alternatively, fresh management might be appointed, or a blend of old and new could be assembled. This may reflect the circumstances of the business and investor objectives, with continuity or change in leadership determined by what best supports value creation and a successful outcome for all parties post-SBO as circumstances evolve...

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Web page updated on 22/05/2026

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