Leveraged Buyouts

In a leveraged buyout, a private equity firm pays for a company mostly with borrowed money, which the company itself must repay. Here is how the math works, why leverage magnifies results and a record-setting 2026 example.

The basic idea

In a leveraged buyout, the buyer puts in some of its own money (equity) and borrows the rest. The debt is placed on the acquired company, which uses its cash flow to pay interest and repay the loans. If the company’s value holds up and the debt shrinks, the equity grows fast.

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