Leveraged Buyout

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Home Startup Terms Glossary Leveraged Buyout

What is a Leveraged Buyout?

A leveraged buyout occurs when a company is acquired using a large amount of borrowed funds. When a leveraged buyout happens, the assets that are purchased typically become collateral for the loan. Leveraged buyouts are attractive to investors because they allow them to make large purchases while eliminating the need to spend much money. The four major scenarios in a leveraged buyout are the split-up, the repackaging plan, the savior plan, and the portfolio plan.

Leveraged Buyout Examples

Key concepts of leveraged buyout include:

  • Point 1. In a leveraged buyout, there is typically a ratio of 90% debt to 10% equity.
  • Point 2. Leveraged buyouts are unique because they are primarily funded with borrowed money

Here’s another web page about leveraged buyout.

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