Leveraged Buyout Definition

Leveraged Buyout is the acquisition of another company having a significant amount of borrowed money to meet the cost of acquisition. The purpose of leveraged buyout is to allow companies for making large acquisitions and never having to commit a large amount of capital. A leveraged buyout is a transaction when a firm or single resource is purchased with a combination of equity and substantial amount of borrowed money, structured to the extent that the target’s funds flows or assets are employed as the security to secure in addition to repay the lent money.