Leveraged Buyout (LBO)
Also called LBO
An LBO is a method of valuing a company for a banker and a method of purchasing a company for a private equity firm.
In the room
The LBO is the centerpiece of private equity interviews and increasingly common in banking ones. Know the three levers that drive returns — debt paydown, EBITDA growth, and multiple expansion — because "how does a sponsor make money?" is the question underneath most LBO discussions.