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Leveraged buyout

• Abbreviated LBO. An acquisition technique involving the use of a large amount of debt to purchase a firm; an example of a financial merger.

• Abbreviated LBO. A transaction used for taking a public corporation private financed through the use of debt funds: bank loans and bonds. Because of the large amount of debt relative to equity in the new corporation, the bonds are typically rated below investment grade, properly referred to as high-yield bonds or junk bonds. Investors can participate in an LBO through either the purchase of the debt (i.e., purchase of the bonds or participation in the bank loan) or the purchase of equity through an LBO fund that specializes in such investments.

 
 Embedded terms in definition
 Corporation
Debt
Equity
E
Financial merger
Firm
Investments
Junk bonds
Junk bond
Lbo
Merger
Participation
Purchase
 
 Related Terms
 Buyout
Highly leveraged transaction
Leveraged beta
Leveraged equity
Leveraged lease
Leveraged portfolio
Leveraged recapitalization
Leveraged required return
Management buyout

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