Tertiary Buyout

Brief Definition

A tertiary buyout, also known as a third-stage buyout, refers to a transaction where a private equity firm acquires a company that has already been through two previous buyouts.

Further Explanation

A tertiary buyout, also known as a third-stage buyout, refers to a transaction where a private equity firm acquires a company that has already been through two previous buyouts. This type of buyout often occurs when the initial private equity owners have added value to the company through various improvements and are ready to exit, selling it to another private equity firm for further development or eventual exit.

Example:
Consider Company X, initially owned by its founders. The founders sell the company to Private Equity Firm A, marking the first buyout. Private Equity Firm A makes significant operational improvements and after a few years, sells Company X to Private Equity Firm B in a second buyout. Private Equity Firm B further grows the company and after several more years, sells it to Private Equity Firm C. This sale to Private Equity Firm C is the tertiary buyout.