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Investment Dictionary


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Employee Buyout

 

An employee buyout is a takeover of the company’s control interest by its employees (usually employee stock ownership plan). Compared to a management buyout, employee buyout involves much more employees, and that provides much more motivation for the labor including management. However, employee buyouts aren’t so popular like leveraged buyouts are. 

 

Occasions when most of the employees are owners of the company are quite rear. And not in all cases they become shareholders during buyout. In the countries where a lot companies have been privatized (owned by the government before) can be found many of such cases. The employees had a preferred right to acquire some shares of the company and employees led by management became as main shareholders. However, for the real buyout performed by employees very strong administration is needed which could be organized by a labor union.






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