Tag: LBO

Leveraged BuyOut is when an acquisition is made by using a large or even excessive portion of financial debt (leverage) to finance the acquisition. The investor can add several layers of debt such as senior debt, junior and non-secured debt as well as Mezzanine forms of financing. As the equity investor requires less capital he can increase his returns through this type of financial engineering.

The Private Equity Leveraged Buyout Model offers a simple template to calculate the financial returns (IRR and cash on cash multiple) of a leveraged buyout acquisition from a Private Equity investment perspective.

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