Definitions for leveraged buyout
lever·aged buy·out

Princeton's WordNetRate this definition:0.0 / 0 votes

1. leveraged buyoutnoun

   a buyout using borrowed money; the target company's assets are usually security for the loan

   "a leveraged buyout by upper management can be used to combat hostile takeover bids"

WiktionaryRate this definition:0.0 / 0 votes

1. leveraged buyoutnoun

   A transaction in which a business firm, or a controlling share of a firm, is purchased using money which was borrowed by pledging all or some of the firm's assets as collateral.

WikipediaRate this definition:0.0 / 0 votes

1. Leveraged buyout

   A leveraged buyout (LBO) is one company's acquisition of another company using a significant amount of borrowed money (leverage) to meet the cost of acquisition. The assets of the company being acquired are often used as collateral for the loans, along with the assets of the acquiring company. The use of debt, which normally has a lower cost of capital than equity, serves to reduce the overall cost of financing the acquisition. The cost of debt is lower because interest payments often reduce corporate income tax liability, whereas dividend payments normally do not. This reduced cost of financing allows greater gains to accrue to the equity, and, as a result, the debt serves as a lever to increase the returns to the equity.The term LBO is usually employed when a financial sponsor acquires a company. However, many corporate transactions are partially funded by bank debt, thus effectively also representing an LBO. LBOs can have many different forms such as management buyout (MBO), management buy-in (MBI), secondary buyout and tertiary buyout, among others, and can occur in growth situations, restructuring situations, and insolvencies. LBOs mostly occur in private companies, but can also be employed with public companies (in a so-called PtP transaction – public-to-private). As financial sponsors increase their returns by employing a very high leverage (i.e., a high ratio of debt to equity), they have an incentive to employ as much debt as possible to finance an acquisition. This has, in many cases, led to situations in which companies were "over-leveraged", meaning that they did not generate sufficient cash flows to service their debt, which in turn led to insolvency or to debt-to-equity swaps in which the equity owners lose control over the business to the lenders.

ChatGPTRate this definition:0.0 / 0 votes

1. leveraged buyout

   A leveraged buyout (LBO) is a strategy where a company is acquired by another entity or individual using a significant amount of borrowed funds to meet the acquisition costs. These borrowed funds may include bonds or loans. The collateral for these borrowed funds often includes the assets of the company being acquired and the assets of the acquiring company. The expectation is that the borrowing will pay for itself through the future cash flows or the sale of assets of the acquired company.

WikidataRate this definition:0.0 / 0 votes

1. Leveraged buyout

   leveraged buyout is acquisition where the purchase price is financed through a combination of equity and debt and in which the cash flows or assets of the target are used to secure and repay the debt. In other words, the acquisition of another company using a significant amount of borrowed money to meet the cost of acquisition. Since the debt, be it senior or mezzanine, always has a lower cost of capital than the equity, the returns on the equity increase with increasing debt. The debt thus effectively serves as a lever to increase returns which explains the origin of the term LBO. LBOs are a very common occurrence in today's "Mergers and Acquisitions" environment. The term LBO is usually employed when a financial sponsor acquires a company. However, many corporate transactions are partially funded by bank debt, thus effectively also representing an LBO. LBOs can have many different forms such as Management Buy-out, Management Buy-in, secondary buyout and tertiary buyout, among others, and can occur in growth situations, restructuring situations and insolvencies. LBOs mostly occur in private companies, but can also be employed with public companies.

Matched Categories

1. • Buyout

How to pronounce leveraged buyout?

1. Alex

   US English

   David

   US English

   Mark

   US English

   Daniel

   British

   Libby

   British

   Mia

   British

   Karen

   Australian

   Hayley

   Australian

   Natasha

   Australian

   Veena

   Indian

   Priya

   Indian

   Neerja

   Indian

   Zira

   US English

   Oliver

   British

   Wendy

   British

   Fred

   US English

   Tessa

   South African

How to say leveraged buyout in sign language?

Numerology

1. Chaldean Numerology

   The numerical value of leveraged buyout in Chaldean Numerology is: 6

2. Pythagorean Numerology

   The numerical value of leveraged buyout in Pythagorean Numerology is: 3

Examples of leveraged buyout in a Sentence

1. John Fraser:

   There’s been little in the way of traditional LBO (leveraged buyout) activity, and what little there has been in the way of new money new issuance has been corporate to corporate activity, m&A activity is approaching record levels, exceeding the 2007 pace, so there are lots of deals happening but unfortunately they are at price points where most of the private equity sponsor community really can’t compete.

2. Ed Yardeni:

   Basically what Chief Financial Officer Rajesh Kalathur’re seeing in the stock market is a slow-motion leveraged buyout of the entire market.

References

1. ^ Princeton's WordNet
   http://wordnetweb.princeton.edu/perl/webwn?s=leveraged buyout
2. ^ Wiktionary
   https://en.wiktionary.org/wiki/Leveraged_Buyout
3. ^ Wikipedia
   https://en.wikipedia.org/wiki/Leveraged_Buyout
4. ^ ChatGPT
   https://chat.openai.com
5. ^ Wikidata
   https://www.wikidata.org/w/index.php?search=leveraged buyout