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A bought out deal is a method of offering securities to the public through a sponsor or underwriter (a bank, financial institution, or an individual). The securities are listed in one or more stock exchanges within a time frame mutually agreed upon by the company and the sponsor. This option saves the issuing company the costs and time involved in a public issue. The cost of holding the shares can be reimbursed by the company, or the sponsor can offer the shares to the public at a premium to earn profits. Terms are agreed upon by the company

The Securities and Exchange Board of India mandates that only private companies can choose this method of issuing securities.[1]


Advantages and disadvantages



See also


  1. ^ "Disclosure and Investor Protection Guidelines, 2000" (PDF). Securities and Exchange Board of India. August 20, 2009. Archived (PDF) from the original on 2012-11-19. Retrieved 2014-04-09.