A ________ occurs when an entrepreneur or an employee group uses borrowed funds to purchase an existing venture for cash.
A) leveraged buyout
B) merger
C) franchise agreement
D) integrated task

Question

Quizplus · Accepted Answer

A leveraged buyout (LBO) is a type of acquisition in which an entrepreneur or an employee group uses borrowed funds (i.e. leverage) to purchase an existing venture for cash. In an LBO, the assets of the target company (i.e. the existing venture) are used as collateral for the loans taken out to finance the acquisition. The goal of an LBO is typically to acquire a controlling interest in the company and improve its financial performance in order to sell it or take it public and earn a profit.

A ________ Occurs When an Entrepreneur or an Employee Group