Leverage Buyout

A leverage buyout (LBO) is a financial strategy where an investor or a company acquires a business primarily using borrowed money (debt). The goal is to purchase the company with a small amount of their own equity and large loans, then improve its operations to increase its value. Once the company is more valuable, the investor can sell it or take profits, paying off the debt along the way. This method amplifies potential returns but also increases financial risk because the success depends on managing the debt and improving the acquired company's performance.