Leveraged Buyout (LBO)

A Leveraged Buyout (LBO) is the acquisition of a company or business unit, typically in a mature industry, with a considerable amount of debt. The buyers who obtain controlling interest repay the debt and typically restructure the company, with the intent to make it healthy and resell it. For an expanded explanation of how leveraged buyouts work, view a definition from Princeton University here and watch this video by Khan Academy.