Which of the following best describes a "leveraged buyout".

Question

Quizplus · Accepted Answer

A leveraged buyout (LBO) involves using borrowed funds (usually in the form of debt) to purchase a company and take it private. The debt is typically secured using the assets of the company being acquired and is paid back through the future cash flows of the business. This allows the buyer to acquire a company with a smaller initial investment than would be required if they were paying for the entire purchase in cash. LBOs can be highly leveraged and carry significant risk, but they can also offer potentially high returns if the acquired company is successfully turned around and sold for a profit.

Which of the Following Best Describes a "Leveraged Buyout