The sale of a unit of a firm to existing management is often achieved through a leveraged buyout.

Question

Quizplus · Accepted Answer

A leveraged buyout (LBO) is a common strategy used to acquire a company or a unit of a firm in which the acquiring company makes use of a significant amount of borrowed capital, typically in the form of loans or bonds, to finance the purchase. In the case of a unit sale to existing management, a leveraged buyout may be a viable option for the management team to acquire the unit from the parent firm while minimizing their cash outlay and improving their potential returns.

The Sale of a Unit of a Firm to Existing