In the context of pensions, a buyout is a risk-transfer mechanism used to secure one or more members' benefits by purchasing an annuity from an insurance company. The member receives an insurance policy and is paid directly. This removes the investment and longevity risk, risk of interest rate changes, increased inflation costs and future running expenses from the scheme, in return for an appropriate buyout cost. Due to the risk transfer, this is usually the most expensive method of securing benefits. This is also used as a method to determine the employer debt under section 75 of the Pensions Act 1995 on the winding up of a pension scheme. See also buyout cost.

In the context of the acquisition of a target company or business, a buyout is an acquisition of that company or business by a management team (either members of the existing team or one assembled for the buyout). Such a transaction is typically financed by a combination of equity finance from a private equity provider (financial sponsor) and may also include debt finance from financial institutions and other investors. The acquisition is made by a newly formed special purpose vehicle owned by the management team and the private equity provider or financial sponsor. These acquisitions, when combined with a high level of debt finance, are also frequently referred to as leveraged buyouts (or LBOs).