LBO: how does it work ?

“Leveraged buy-out” is a generic term covering several types of operations (MBO, MBI, BIMBO, Spin-off) that serve to align the interests of a venture capitalist with a management team.

The company’s acquisition generally involves a special-purpose holding vehicle, and is financed with capital from the investor and management team as well as bank loans.

LBO summarised

• Takeover of a company by a management team
• In association with financial investors
• Generally financed in part with bank loans
• With a view to developing the company together
• Generating a medium-term capital gain together