The word leveraged in the term leveraged buyout (LBO) refers to what?
A)Pressure from the board of directors
B)Debt
C)Equity
D)Poor strategic position of targeted company
E)Inclined plane

Question

Quizplus · Accepted Answer

Leverage in this case refers to debt.
Key Takeaway: A leveraged buyout typically loads the company acquired with debt. This reduces the amount of cash required to acquire the company. More debt means more risk, but also a higher return on capital invested. This is traditionally the domain of private equity firms. Since many of the top consulting firms service private equity, you should learn as much about leveraged buyouts as possible.

The Word Leveraged in the Term Leveraged Buyout (LBO) Refers