In a(n)________,managers and/or employees borrow money from a financial institution and pay the owner the total agreed-upon price at closing;they then use the cash generated from the company's operations to pay off the debt.

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Quizplus · Accepted Answer

LBO stands for leveraged buyout, which is a financial strategy where managers and employees borrow money using the company's assets as collateral, and then use the funds to purchase the company from the current owner. The goal is to use the company's cash flow to pay off the debt over time. This is a common approach for management teams looking to acquire companies they are already familiar with, and can be an effective way to realize significant returns on investment if executed properly. The other options listed - irrevocable trust, buy/sell agreement, and estate freeze - are all financial and legal strategies, but are not directly related to the concept of an LBO.

In A(n)________,managers And/or Employees Borrow Money from a Financial Institution