Basically, to buy-out a company means the interested party is buying a majority of the target company’s shares. The strategy is considered a quick way for companies to grow so that they could be better placed against their competitors. Although the process may bring financial and strategic benefits for the buyer, possible pain-points include outstanding debt and any resistance by the target company’s shareholders and workers.
For example…
Consider a luxury watchmaker, LuxeWatches whose sales have been dwindling ever since the introduction of the smart watch product range. If LuxeWatches’s management had a strategy to produce a luxury version of smart watches, buying-out a smart watch company may be a great idea. Not only will LuxeWatches have a working, in-demand prototype of a smart watch, they can immediately apply their tweaks to make it a luxury smartwatch without reinventing the wheel.
