A BEECHMONT CREST ONLINE GUIDE
MERGERS & ACQUISITIONS
What is a leveraged buyout?
A leveraged buyout (or LBO) occurs when a buyers uses debt to acquire a company. In most cases, a debt-financed LBO results in a publicly held company going private. The buyer in a leveraged buyout is usually a single individual or a group of individuals.
A management buyout is a type of LBO. In a management buyout, the management of a company acquires the company, and removes its shares from publicly traded securities markets.
Famous historical levered buyouts include the 1989 LBO of RJR Nabisco by Kohlberg Kravis & Roberts.
LBOs in the news: health care firm HCA Inc
In November 2006, a buyout group that included Bain Capital LLC, Merrill Lynch & Co., Kohlberg Kravis Roberts & Co., acquired HCA Inc. in a leverage buyout.
The LBO was the largest of its kind in U.S. history. The buyers of HCA assumed $11.7 billion of the company’s debt.