- buy-out
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In the context of pensions, the securing of one or more members' benefits by purchasing an annuity from an insurance company. It is the most expensive method of securing benefits and is used to determine the employer debt that arises under section 75 of the Pensions Act 1995 on the winding up of a pension scheme. See also buy-out cost.In the context of the acquisition of a target company or business, an acquisition of that company or business by a management team (either members of the existing team or one assembled specifically for the purpose of the buyout) financed by a combination of equity finance from a private equity provider and debt finance from financial institutions and other investors. The acquisition will be made by a newly formed special purpose vehicle owned by the management team and the private equity provider. Such acquisitions are frequently also referred to as leveraged buyouts or LBOs.Related links
Practical Law Dictionary. Glossary of UK, US and international legal terms. www.practicallaw.com. 2010.
