Investments & Financial Planning

Leveraged buyout is a strategy used to take a public corporation private that is financed through debt such as bank loans and bonds. Because of the large amount of debt relative to equity in the new corporation, the bonds are typically rated below investment grade, properly referred to as junk bonds or high yield bonds. Investors can participate in an leveraged buyout through either the purchase of the debt (purchase of the bonds or participation in the bank loan) or the purchase of equity through an Leveraged buyout fund that specializes in such investments.