Budding occurs both in prokaryotic and eukaryotic cells. It is a vegetative form of reproduction in plants and plants also have eukaryotic cells.
Budding occurs in unicellular and invertebrate organisms such as hydra, corals, yeast and sponges. It is a form of asexual reproduction in which the new organism is developed from an outgrowth in parent organism termed as bud and separates only when the new organism becomes mature. Being an asexual mode of reproduction, the offspring are genetically identical or clones to the parent organisms.
Budding in hydra occurs by development of a small bud by repeated mitotic division from the parent hydra,after which the bud receives nutrition from the parent to grow healthy. Small tentacles and mouth is developed and then a new organism separates from the parent.
In yeasts an outgrowth arises in the parent body and the parent and nucleus of the parent yeast gets separated into two parts of which one nuclei shifts to the newly formed bud which divides to form new organism.