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What does LBO stand for?
What does LBO mean? This page is about the various possible meanings of the acronym, abbreviation, shorthand or slang term: LBO.
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Term | Definition | Rating |
---|---|---|
LBO | Leveraged Buy Out | |
LBO | Line Build Out | |
LBO | Left Business Observer newsletter | |
LBO | Large Business Office | |
LBO | Large Bowel Obstruction | |
LBO | Lusambo, Zaire | |
LBO | Let's Break Out | |
LBO | dBASE IV Compiled label Object code | |
LBO | Laboratory of Biomechanical Orthopedics | |
LBO | Landguard Bird Observatory | |
LBO | Leveraged Buyout | |
LBO | Line of Business Owner | |
LBO | Love Being Owners | |
LBO | Long Baseline Observatory | |
LBO | Long Beach Opera | |
LBO | Licensed Betting Office | |
LBO | loose but OK | |
LBO | Luxembourg Beach Open | |
LBO | Legislative Budget Office | |
LBO | Last Best Offer | |
LBO | Last Ball Over | |
LBO | Large Bowel Obstructions | |
LBO | Lanka Business Online | |
LBO | Compiled Label | |
LBO | Lying By Omission |
What does LBO mean?
- lbo
- A leveraged buyout (LBO) is one company's acquisition of another company using a significant amount of borrowed money (leverage) to meet the cost of acquisition. The assets of the company being acquired are often used as collateral for the loans, along with the assets of the acquiring company. The use of debt, which normally has a lower cost of capital than equity, serves to reduce the overall cost of financing the acquisition. The cost of debt is lower because interest payments often reduce corporate income tax liability, whereas dividend payments normally do not. This reduced cost of financing allows greater gains to accrue to the equity, and, as a result, the debt serves as a lever to increase the returns to the equity.The term LBO is usually employed when a financial sponsor acquires a company. However, many corporate transactions are partially funded by bank debt, thus effectively also representing an LBO. LBOs can have many different forms such as management buyout (MBO), management buy-in (MBI), secondary buyout and tertiary buyout, among others, and can occur in growth situations, restructuring situations, and insolvencies. LBOs mostly occur in private companies, but can also be employed with public companies (in a so-called PtP transaction – public-to-private). As financial sponsors increase their returns by employing a very high leverage (i.e., a high ratio of debt to equity), they have an incentive to employ as much debt as possible to finance an acquisition. This has, in many cases, led to situations in which companies were "over-leveraged", meaning that they did not generate sufficient cash flows to service their debt, which in turn led to insolvency or to debt-to-equity swaps in which the equity owners lose control over the business to the lenders.
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"LBO." Abbreviations.com. STANDS4 LLC, 2024. Web. 19 Mar. 2024. <https://www.abbreviations.com/LBO>.
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