Employee Buyout (EBO)
A restructuring strategy in which employees buy a majority stake in their own firms. This form of buyout is often done by firms looking for an alternative to a leveraged buyout. Companies being sold can be either healthy companies or ones that are in significant financial distress. Investopedia Says:
For small firms, an employee buyout will often focus on the sale of the company's entire assets, while for larger firms, the buyout may be on a subsidiary or division of the company. The official way an employee buyout occurs is through an employee stock ownership plan (ESOP). The buyout is complete when the ESOP owns 51% or more of the company's common shares. Related Terms:
Buyout
Employee Stock Option - ESO
Employee Stock Ownership Plan - ESOP
Leveraged Buyout - LBO
Management Buyout - MBO
Reverse Leveraged Buyout |