Encyclopedia of Investment Terminology

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Leveraged Buyout

In a leveraged buyout, an investment firm in the private equity field will purchase a company with a significant amount of borrowed money. A firm will take in the assets that are used and use them as collateral for loans. This allows a buyout without a significant amount of upfront capital. An example of a leveraged buyout was KKR’s buyout of RJR Nabisco in 1989.

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