Leveraged Buyout Definition Thursday, November 15, 11:33 AM ET
A leveraged buyout occurs when one company acquires another using a significant amount of borrowed capital, and uses the assets of the company being acquired as loan collateral, creating senior debt. The acquiring company can also issue junior, or mezzanine, debt which is not collateralized, and thus bears a higher interest cost. Leveraged buyouts slowed down following the 2008 financial crisis, when lenders announced major writedowns as a result of credit losses.
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