Leverage Buyout

A leveraged buyout (LBO) is the acquisition of a company or a division of a company with a substantial portion of borrowed funds. In a LBO, the assets of the company being acquired are used as collateral for the loans, in addition to the assets of the acquiring company, and going forward the acquired company’s profits are used for the repayment of the loans. The purpose of LBOs is to allow companies to make large acquisitions without having to commit a lot of capital.

Leave a Reply