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In an ordinary buyout, the buyer usually has most of the cash with which to complete the purchase. A leveraged buyout, also known as an LBO, involves the buyer in borrowing money to fund the purchase in the hope the purchased asset will more than fund the debt interest repayment.

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Q: How does a leveraged buyout differ from an ordinary buyout?
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What is term for The strategy of investors who are attempting a leveraged buyout is touse debt to finance the purchase of buyout the firm's stockholders and gain control of the firm themselves?

The strategy of investors who are attempting a leveraged buyout is:


When companies are purchased through a leveraged buyout?

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Why is free cash flow important to leveraged buyouts?

Free cash flow or FCF is important to leveraged buyouts because it helps an analyst or banker determine whether there are sufficent excess funds to pay back the loan associated with the leveraged buyout. Free cash flow is a measure of financial performance calculated as operating cash flow minus capital expenditures. FCF is important to leveraged buyouts because it helps an analyst or banker determine whether there are sufficient excess funds to pay back the loan associated with the leveraged buyout.


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Who has used a leveraged buyout?

One of the largest leveraged buyouts on record was the acquisition of HCA Incorporated in 2006 by Kohlberg Kravis Roberts and Corporation, Bain and Corporation, and Merrill Lynch. The three companies paid around $33 billion for the acquisition.Ê


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