Leveraged Buyout Strategy

A leveraged buyout (LBO) is a strategy where an investor or a private equity firm acquires a company primarily using borrowed money. The goal is to buy the company, improve its operations and profitability, and eventually sell it for a profit. The debt used for the purchase is often secured against the company's own assets. This approach allows investors to take control of a business with a relatively small amount of their own money, potentially leading to higher returns if the company succeeds. However, it also carries financial risk, as the company must generate enough cash to service the debt.