Leveraged Buyout

Leveraged Buyouts rose to prominence...

in the 1980s

Leveraged Buyouts are usually undertaken by...

private equity firms

Leveraged Buyout

refers to the takeover of a company that utilizes mainly debt to finance the buyout

The company performing the LBO or takeover only has to provide a amount of the financing (usually around BLANK% of the cost is financed through debt) yet is able to make a BLANK purchase, hence the name 'BLANK'.

small, 90%, large, Leveraged

The expectation with leveraged buyouts

the return generated on the acquisition will more than outweigh the interest paid on the debt, hence making it a very good way to experience high returns whilst only risking a small amount of capital.

The most common way for the debt to be raised...

the target company's assets to be provided as collateral for the debt. The PE firm will then either sell off parts of the target company or use its future cash flows to pay off the debt and then exit at a profit.