An attempt by employees, management, or a group of investors to purchase an organization primarily through borrowing is called a(n)
A) golden parachute.
B) arbitrage agreement.
C) factor transaction.
D) leveraged buyout.

Question

Quizplus · Accepted Answer

A leveraged buyout (LBO) is an acquisition of a company that is financed mostly with debt. In this type of transaction, the acquiring company (often a group of investors) borrows a significant amount of money to finance the purchase of the target company. The assets of the target company are then used as collateral to secure the loan. The goal is for the target company to generate enough cash flow over time to repay the debt used to finance the purchase.

An Attempt by Employees, Management, or a Group of Investors