Leveraged buyouts (LBO) are inefficient and do not generate enough cash to service the debt that was created by the merger.

Question

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Leveraged buyouts (LBOs) can be highly efficient and often generate sufficient cash flow to service the debt incurred in the transaction. The success of an LBO depends on the ability of the acquired company to generate strong cash flows and improve operational efficiencies, which can help in servicing and eventually paying down the debt.

Leveraged Buyouts (LBO) Are Inefficient and Do Not Generate Enough