leveraged buyouts (LBO)

A leveraged buyout (LBO) is a financial transaction where an investor or group of investors acquires a company using a significant amount of borrowed money, or leverage. The investors put up a small portion of their own capital and finance the rest through loans, aiming to improve the company’s performance and value. The goal is to eventually sell the company for a profit, paying off the debt while keeping the gains. LBOs can lead to substantial returns, but they also carry higher risks due to the reliance on debt financing.