Write a short note on Leveraged buyout.

Leveraged buyout When one refers to something (a company, a property or an investment) as 'highly leveraged' it means that item has more debt than equity. A leveraged buyout (LBO) is the acquisition of a company in which the buyer puts-up only a small amount of money and borrows the rest. The buyer can achieve this desirable result because the targeted acquisition is profitable and may provide ample cash that can be used to repay the debt. The expectation with leveraged buyout is that the return generated on the acquisition will more than outweigh the interest paid on the debt, hence making it a very good way to experience high returns whilst only risking a small amount of capital.