: Often called "junk bonds," these are unsecured and carry higher interest rates due to increased risk.
: The assets of the acquired company (and sometimes the acquirer) serve as collateral for the loans. leveraged buyout
The Mechanics and Strategy of Leveraged Buyouts (LBOs) A is a specialized financial transaction in which a company is acquired using a significant amount of borrowed funds to meet the cost of acquisition. In a typical LBO, the debt-to-equity ratio is high, with borrowed capital often accounting for 60% to 90% of the purchase price. Core Structural Components : Often called "junk bonds," these are unsecured
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 : Often called "junk bonds