leveraged buyout

leveraged buyout
Corporate acquisitions in which the acquiring company borrows most or all of the funds needed to finance the purchase. In a typical leveraged buyout, the buyer intends to repay the finance debt from funds gained from either the sale of assets owned by the acquired company or from profits earned by the acquired company. The high level of debt associated with almost all leveraged buyouts makes them relatively high-risk transactions. Thus, while some bank financing is often involved, some form of junior debt is needed. The junior debt in leveraged buyout may come from a lender willing to take a subordinate position. This type of financing is often called mezzanine financing. The funds needed for a leveraged buyout may also be raised by issuing junk bonds. American Banker Glossary
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( LBO)
A transaction used to take a public corporation private that is financed through debt such as bank loans and bonds. Because of the large amount of debt relative to equity in the new corporation, the bonds are typically rated below investment-grade , properly referred to as high-yield bonds or junk bonds. investors can participate in an LBO through either the purchase of the debt ( i.e., purchase of the bonds or participation in the bank loan) or the purchase of equity through an LBO fund that specializes in such investments. Bloomberg Financial Dictionary
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Purchase of a company by an institution using a high proportion of debt. A type of management buy-out ( MBO).

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leveraged buyout leveraged buyout ➔ buyout

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(LBO)
   The purchase of a company using borrowed funds, with the company's assets used as collateral (or as leverage) for the borrowing. The purchaser then repays the loans out of the acquired company's cash flow, or by selling its assets.

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leveraged buyout UK US noun [C] (ABBREVIATION LBO)
► FINANCE an occasion when a person or group uses borrowed money to buy a company: »

Should such an offer emerge it would be the largest leveraged buyout in UK corporate history.


Financial and business terms. 2012.

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Look at other dictionaries:

  • leveraged buyout — leveraged buy·out / bī ˌau̇t/ n: the acquisition of a company usu. by members of its own management using debt to finance the purchase of equity with debt to be paid by future profits or sale of company assets Merriam Webster’s Dictionary of Law …   Law dictionary

  • Leveraged Buyout — Un financement d acquisition par emprunt, également désignée par le sigle LBO (pour l anglais leveraged buy out) consiste à racheter une société en ayant recours à de l endettement bancaire aussi appelé effet de levier. C est l entreprise… …   Wikipédia en Français

  • Leveraged buyout — Un financement d acquisition par emprunt, également désignée par le sigle LBO (pour l anglais leveraged buy out) consiste à racheter une société en ayant recours à de l endettement bancaire aussi appelé effet de levier. C est l entreprise… …   Wikipédia en Français

  • leveraged buyout — (LBO) A transaction where a purchaser uses the assets of the corporation to be acquired (target) as collateral for the loan to buy the stock of the target. LBOs stand a significant risk of bankruptcy because, after the transaction, they have… …   Glossary of Bankruptcy

  • leveraged buyout — n technical when someone borrows money to buy all or most of the ↑stock of a company by promising to pay the bank back by selling the company s ↑assets if they cannot pay back the money they borrowed …   Dictionary of contemporary English

  • leveraged buyout — n. Business the acquisition of a corporation by a group of investors using mostly borrowed funds which are secured by the assets of the corporation being acquired …   English World dictionary

  • Leveraged buyout — A leveraged buyout (or LBO, or highly leveraged transaction (HLT), or bootstrap transaction) occurs when a financial sponsor acquires a controlling interest in a company s equity and where a significant percentage of the purchase price is… …   Wikipedia

  • leveraged buyout — noun a buyout using borrowed money; the target company s assets are usually security for the loan a leveraged buyout by upper management can be used to combat hostile takeover bids • Hypernyms: ↑buyout • Hyponyms: ↑bust up takeover * * * noun, pl …   Useful english dictionary

  • leveraged buyout — UK [ˌliːvərɪdʒd ˈbaɪaʊt] / US [ˌlev(ə)rɪdʒd ˈbaɪaʊt] noun [countable] Word forms leveraged buyout : singular leveraged buyout plural leveraged buyouts business a way of taking control of a company by buying its shares using borrowed money, with… …   English dictionary

  • leveraged buyout — /ˌli:vərɪdʒd baɪaυt/, leveraged takeover /ˌli:vərɪdʒd teɪkəυvə/ noun an act of buying all the shares in a company by borrowing money against the security of the shares to be bought. Abbreviation LBO ▪▪▪ ‘…the offer came after management had… …   Dictionary of banking and finance

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