Leveraged Buyout Direct

LBOs are defined by their unique capital structure and the use of the target company's own assets to facilitate the purchase.

: The cash investment from the PE firm, usually 10%–40% of the deal. The LBO Lifecycle leveraged buyout

: The "leverage" comes from using a small amount of equity—typically provided by a financial sponsor like a private equity (PE) firm—and a large amount of debt. LBOs are defined by their unique capital structure

: The assets of the acquired company (and sometimes the acquirer) serve as collateral for the loans. : The assets of the acquired company (and

: A hybrid of debt and equity that fills the gap between senior debt and equity.

The ultimate goal of an LBO is to realize high returns—often targeting an of 20% to 30%. Understanding the Leveraged Buyout Model - HBS Online