Leveraged Buyout (LBO) Definition - Investopedia.
A management buyout (MBO) is a corporate finance transaction where the management team of an operating company acquires the business by borrowing money to buy out the current owner(s). This transaction is a type of leveraged buyout (LBO) and can sometimes be referred to as a leveraged management buyout (LMBO).
Leveraged buyout (LBO), acquisition strategy whereby a company is purchased by another company using borrowed money such as bonds or loans. In numerous cases, leveraged buyouts (LBOs) have been used by managers to buy out shareholders to gain control over the company, and the strategy played an important role in the restructuring of corporate America in the 1980s.
Leveraged Buyout (LBO) An acquisition of a target company by a financial sponsor or the other firm (Acquirer) by using debt funding for acquisition is called as Leveraged Buy Out In LBO’s the Acquirer uses the Target’s cash flow to service the debt and the Target’s assets are used as Collateral.
Leveraged Buyout (LBO) Definition. LBO (Leveraged Buyout) analysis helps in determining the maximum value that a financial buyer could pay for the target company and the amount of debt that needs to be raised along with financial considerations like the present and future free cash flows of the target company, equity investors required hurdle rates and interest rates, financing structure and.
Business Jargons Banking Finance Leveraged Buyout Leveraged Buyout Definition: Leveraged Buyout or LBO is the transaction wherein the acquisition of another company or a single asset is financed through the combination of equity and the significant amount of debt or borrowed funds.
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Note on Leveraged Buyouts A leveraged buyout, or LBO, is the acquisition of a company or division of a company with a substantial portion of borrowed funds. In the 1980s, LBO firms and their professionals were the focus of considerable attention, not all of it favorable. LBO activity accelerated throughout the 1980s, starting from a basis of.