What is Leveraged Buyout?
A Leveraged Buyout (LBO) is a transaction whereby a company’s stock or assets are purchased with borrowed money, making the company’s new capital structure to be a high percentage of debt. An acquisition of all the selling company’s stock, usually by a newly formed corporation created for the sole purpose of the acquisition, followed immediately by a merger of the buyer’s new company with the acquired company, so that the assets of the acquired company become available to the buyer to secure debt.
