Leverage Buyouts

A Leveraged Buyout (LBO) is a financial transaction where an investor or company buys a business using a significant amount of borrowed money. The idea is to use the acquired company's own assets and cash flow to repay the debt. This strategy can amplify returns on investment if the business does well, but it also carries risks, as high debt levels can lead to financial trouble if the company struggles. LBOs are often used in private equity, where firms seek to improve businesses and eventually sell them for a profit.