A leveraged buyout (LBO) is when a firm is acquired by:

Question

Quizplus · Accepted Answer

A leveraged buyout (LBO) is when a small group of equity investors finance the majority of the purchase price with debt. Management may or may not be involved in the acquisition, but the key feature is the high amount of debt used to finance the transaction, which is typically repaid using the cash flow of the acquired company. A and C do not fully capture the characteristic of an LBO, and D is incorrect as an LBO typically involves the acquisition of the entire company, not just its assets.

A Leveraged Buyout (LBO) Is When a Firm Is Acquired