A Leveraged Buyout (LBO) is a takeover strategy in which a company is primarily financed with borrowed money. The buyer takes out loans to pay the purchase price and uses the acquired company's assets as collateral.
LBOs are commonly used by private equity firms to acquire companies, improve their operations, and sell them at a profit.
### Example: A private equity firm acquires a mid-sized company through a leveraged buyout. The firm finances the purchase with a loan secured by the company's assets.