Hidden Valley Communications, Inc., located in a remote area of Utah, made a special device that was used in LTE phones. After three years of local operations, the company that employed 4,000 people was planning to close its Utah operation and move the assembly offshore. Under the direction of a financial services company that financed the deal, the employees agreed to become owners of the company and continue to operate the business. The business concept that describes this arrangement is
A) IPO (initial public offering).
B) LBO (leveraged buyout).
C) EPO (equity public offering).
D) HM (horizontal merger).

Question

Quizplus · Accepted Answer

A leveraged buyout or LBO is an attempt by employees, management, or investors to buy out the stockholders in a company. This action usually requires the buyers to borrow a sizeable amount of funds.