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LBO: Leveraged Buyout
It is the acquisition of another company using a significant amount of borrowed money (bonds or loans) to meet the the cost of acquisition. Its purpose is to allow companies to make large acquisitions without having to commit a lot of capital.
Statement formation
At the height of the real estate bubble in 2007, the black store group bought Hilton in a $26 billion leveraged buyout.
Leveraged buyout is the acquisition of another company using a significant amount of borrowed money (bonds/loans) to meet the cost of acquisition.
The leverage buyout analysis generally provides a “floor” evaluation for the company and is useful in determining what a financial sponsor can afford to pay for the target and still realize an adequate return on its investment.
A leveraged buyout (LBO) is the acquisition of another company using a significant amount of borrowed money (bonds or loans) to meet thecost of acquisition. Often, the assets of the company being acquired are used ascollateralfor the loans in addition to the assets of the acquiring company. The purposeof leveragedbuyoutsis to allow companies to make largeacquisitionswithout having to commit a lot of capital.
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