LBO

Borrowing-funded takeover

LBO stands for leveraged buyout, a corporate acquisition financed primarily with borrowed money rather than the buyer's own capital.

The target company's assets often serve as collateral for the loans.

LBOs allow investors to acquire companies while putting relatively little of their own money at risk: The private equity firm completed an LBO of the retail chain.

debt

borrowing

Temporary taking of another's

loansBorrowed money arrangements
liabilitiesAmounts owed to others
interestAttention, stake, or fee

repayment · principal · amortization · collateral · refinancing · creditors · bondholders · default · foreclosure · insolvency

mechanics

acquisition

Act of obtaining something

tender offerPublic share purchase proposal
hostile takeoverUnwanted corporate buyout attempt
friendly takeoverNegotiated company acquisition

bid · proxy fight · target company · acquirer · transaction · closing · due diligence · debt financing · tranche · covenant

risk

bankruptcy

Legal status when insolvent

insolvencyInability to pay debts
volatilityRapid, unpredictable changeability
distressedSuffering emotional turmoil

restructuring · liquidation · downside · overleveraged · credit risk · debt spiral · junk bonds · speculative · precarious

strategy

synergy

Combined effect exceeding components

cost cuttingReducing expenditures deliberately
asset strippingSelling acquired company's valuables
financial engineeringDesigning novel monetary instruments

consolidation · integration · turnaround · value creation · EBITDA · cash flow

privateequity

private equity

Capital for unlisted companies

fund managerOversees pooled investment assets
limited partnerInvestor with capped liability
general partnerFully liable business co-owner

equity stake · exit strategy · IPO · divestiture · holding period · fund · institutional investor · KKR · Blackstone · Carlyle

LBO

borrowing

acquisition

bankruptcy

synergy

private equity

LBO

Opposites

Categories

Family