What is a leveraged buyout of a business?

What is a leveraged buyout of a business?

On Behalf of | Oct 17, 2019 | Mergers & Acquisitions |

Whether you have been thinking about selling off all, or part of your business or if an offer has come to you completely out of left field, you may be wondering about a leveraged buyout.

Whether the business is fairly new and growing rapidly, older and holding steady or in a declining position, a buyout could be right for you and your business. Selling a small business could happen in many different ways.

One of those ways could be in a leveraged buyout. In a leveraged buyout, a buyer acquires a company by putting up a small amount of money and borrowing the rest through a loan. The phrase ‘leveraged’ is because the buyer leverages or takes advantage of their own equity in order to put together a prospective offer for the seller.

These type of buyouts are seen when a business wants to take a public company to the private sector, when selling off a portion of a larger business or if the deal is to be a private transfer between the parties. Occasionally, a once publicly held and traded company will want to go private. A leveraged buyout is a great means in which to do this.

A business acquisition such as by means of a leveraged buyout, can be a satisfying transaction for both buyer and seller. Of course, negotiation usually comes along with this as each party moves towards a resolution. Finding the solution that is possible for you and the business is important and done so by defining what matters most to each party and working towards a solution – usually by means of negotiation.