The strategy of investors who are attempting a leveraged buyout is to:
A)Shape up the company for quick resale.
B)Use debt to finance the buyout of the firm's stockholders and gain control of the firm themselves.
C)Secure ownership of all of the existing stock in a company by issuing and selling large amounts of new stock.
D)Use investment tax credits from the government to acquire all of the physical assets owned by the firm.

Question

Quizplus · Accepted Answer

The strategy of an investor in a leveraged buyout is to use debt financing to buy out the existing stockholders and gain control of the firm themselves. This is done in the hopes of improving the firm's performance and ultimately selling it for a profit. Choices A, C, and D are not accurate descriptions of the strategy of a leveraged buyout.

The Strategy of Investors Who Are Attempting a Leveraged Buyout