What Is A Buy-Out?

In the world of business finance, a buy-out is the act of gaining a controlling ownership interest in another company. It is simply another word for an acquisition.

Is A Buy-Out Good Or Bad?

In the very fitting words of Robert Penn Warren, “they are not good or bad but are good and bad and the good comes out of bad and the bad out of good[.]” It’s all about perspective. Typically though, a buy-out is very good for the people who own stock in the company being acquired, at least financially speaking.

What Happens If You Own Stock In A Company That Gets Bought Out?

If you own stock in a company that gets bought out, you have some options. Generally, the company buying-out another company will offer to buy outstanding shares of the company it is buying out for a set price. You can keep your shares or sell them immediately, or you can hold onto them and sell them off after the buy-out.

Is Buy-Out A Good Goal For Start-Ups?

Being bought out by a larger company is a common exit strategy for start-ups. In fact, some start-ups are created with the goal of being acquired by a larger competitor. However, there is no general consensus on whether it is a good idea to include buy-out in a business plan. Some investors believe it shows short-sightedness, while others value its inclusion as a planned exit strategy.

Got A Buy-Out Question?

Attorney Chris Mutchler may be able to help. Get in touch with The Law Office of Christopher J. Mutchler. If we can’t help with your specific problem, we’re more than happy point you in the direction of someone who can!

Christopher J. Mutchler, Esq.

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Christopher J. Mutchler
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