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Understanding LBOs: What are Leverage Buyouts and How Do They Work? #shorts
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Have you ever heard of LBOs? 🤔
An LBO, or leverage buyout, is when a financial sponsor acquires a company with a large portion of debt, typically 60-70% of the capital structure, but it can be even up to 80% in a frothy debt market. The remaining 30-40% is provided by the financial sponsor. 💸💰
But why would someone do an LBO? The goal is to deliver a 20% IRR typically over a five to seven year holding period. This can be achieved through a sale to a strategic or financial sponsor or an IPO. 📈💼
If you're interested in finance and want to learn more about complex financial concepts like LBOs, make sure to follow us for more educational content! 📚💡
#LBO #leveragebuyout #finance101 #financialsponsors #investmentstrategy #financialacquisitions
An LBO, or leverage buyout, is when a financial sponsor acquires a company with a large portion of debt, typically 60-70% of the capital structure, but it can be even up to 80% in a frothy debt market. The remaining 30-40% is provided by the financial sponsor. 💸💰
But why would someone do an LBO? The goal is to deliver a 20% IRR typically over a five to seven year holding period. This can be achieved through a sale to a strategic or financial sponsor or an IPO. 📈💼
If you're interested in finance and want to learn more about complex financial concepts like LBOs, make sure to follow us for more educational content! 📚💡
#LBO #leveragebuyout #finance101 #financialsponsors #investmentstrategy #financialacquisitions