Leveraged Buyout

Definition

Buying a company using mostly borrowed money, which is the corporate equivalent of buying a house with no money down except the house is a billion-dollar company. The acquired company often ends up paying for its own acquisition, like making someone pay for their own kidnapping ransom.

Example Usage

"The private equity firm executed a leveraged buyout, loaded the company with debt, and then blamed management when things went south. A tale as old as time."

Related Terms

Advanced

accretion

The gradual increase in value of a bond as it approaches maturity, or the increase in earnings per share following an acquisition. Basically, when numbers get bigger and finance people get to feel smart about predicting it.

💰 Finance / Accounting

Advanced

non-performing asset

Banking euphemism for a loan that's gone bad and isn't generating income anymore, like a car that won't start but you still owe payments on. It's the financial equivalent of politely calling a disaster a "challenge."

💰 Finance / Accounting

Advanced

special purpose vehicle

A separate legal entity created for a specific financial purpose, often to isolate risk or achieve off-balance-sheet treatment. It's a corporate subsidiary with one job, usually something the parent company wants plausible deniability about.

💰 Finance / Accounting

Intermediate

recourse debt

A loan where the lender can come after your other assets if the collateral isn't enough to cover the debt—the financial equivalent of co-signing for your irresponsible cousin. Sleep tight!

💰 Finance / Accounting

Advanced

stuffing the channel

Forcing distributors to buy more inventory than they can sell to inflate current sales figures, essentially borrowing from future sales to make today look better. It's corporate kicking-the-can-down-the-road at its finest.

💰 Finance / Accounting

Intermediate

variance analysis

The practice of comparing actual financial results to budgeted or forecasted amounts and investigating the differences. It's how management discovers that 'unforeseen circumstances' is code for 'we completely missed our projections.'

💰 Finance / Accounting

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