What does the acronym LBO represent?

Question

Quizplus · Accepted Answer

LBO stands for leveraged buy-out, which is a financial transaction where a company is purchased using a significant amount of debt. This debt is often secured with the company's assets and cash flows, and the buyers, who are typically private equity firms, use the company's future earnings to repay the debt. The goal of an LBO is to generate a high return on investment for the buyers by improving the target company's operations, reducing costs, and increasing revenue, and then eventually selling the company for a profit. A long-term borrowing origination (A) and a loss buying opportunity (C) are not accurate definitions of LBO, and of legally-binding origin (D) does not make sense in this context.

What Does the Acronym LBO Represent