Briefly explain leveraged buyout?

One of the technical questions.

  • A leveraged buyout (LBO) is when a company or investor buys another company using mostly borrowed money, loans, or even bonds to make the purchase.
  • The company’s acquired assets are usually used as collateral for those loans.
  • Sometimes, an LBO’s ratio of debt to equity can be 90-10.
  • Any debt percentage higher than that can lead to bankruptcy.
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