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A buy-out is a contractual clause in which the company or other stockholders can buy out the equity of another stockholder. Usually this is triggered by a specified event, such as termination, death, or disability. The buy-out clause usually specifies a fixed price for the buyout, a formula to determine the price for the buyout, or a process to engage third party valuation experts to determine the price for the buyout.

Last reviewed: May 10, 2021