How do Yeast Budding?

Budding Yeast: Saccharomyces cerevisiae

Saccharomyces cerevisiae, the budding yeast, is the common yeast used in baking ("baker's yeast") and brewing ("brewer's yeast"). (It is only distantly related to another unicellular fungus, Schizosaccharomyces pombe, the fission yeast.)

It is a popular "model" organism in the laboratory because it is a unicellular eukaryote whose cellular activities are much more like ours than a bacterium like E. coli. But like E. coli,
It can be cultured easily.
It grows rapidly.
Its entire genome is known. [Link]
It can be easily transformed with genes from other sources.

Life Cycle

Budding yeast can live with either two genomes (diploid) or one (haploid). In either case, it reproduces by forming buds (hence the name) by mitosis.

Haploid cells occur in two different mating types: a or α. The type is determined by the expression of a gene at an active mating type locus.

Haploid cells can live indefinitely in the haploid condition. However, if two cells of opposite mating types meet, they can fuse and enter the diploid phase of the cell cycle.

This is not as rare event as you might expect.
Germination of the haploid spores takes place while they are still within the ascus and mating normally occurs there.
Even if haploid cells go through a period of growth, they can still find cells of the opposite mating type most of the time. Although the illustration shows each haploid cell producing a bud of the same mating type, often the cell switches mating type. It is able to do so because in addition to the active mating type locus, it contains two "silent" loci - one a and one α. A double-strand break (DSB) at the active locus is repaired with the information from one of the silent loci. If the cell is a, it prefers to tap the information in the silent α locus; and vice-versa.
Cells in the diploid phase are more resistant to harsh environmental conditions. When diploid cells begin to run out of food, they undergo meiosis, forming four haploid spores in an ascus (Saccharomyces cerevisiae belongs to the ascomycetes.)

When good conditions return, the spores germinate producing four haploid yeast cells: two a and two α.

Resource : http://users.rcn.com/jkimball.ma.ultranet/BiologyPages/Y/Yeast.html