Which of the following is the best definition of a leveraged buyout (LBOs)?
A) The complete absorption of one company by another, where the acquiring firm retains its identity and the acquired firm ceases to exist as a separate entity.
B) Going-private transactions in which a large percentage of the money used to buy the stock is borrowed. Often, incumbent management is involved.
C) Typically an agreement between firms to create a separate, co-owned entity established to pursue a joint goal.
D) A targeted stock repurchase where payments are made to potential bidders to eliminate unfriendly takeover at-tempts.
E) All publicly owned stock in a firm is replaced with complete equity ownership by a private group.

Question

Quizplus · Accepted Answer

Leveraged buyouts (LBOs) are transactions where a significant portion of the funds used to purchase a company's shares is borrowed. Often, these transactions result in the company going private, and the existing management may play a key role in the buyout process.

Which of the Following Is the Best Definition of a Leveraged