Question

A leveraged buyout refers to a(n): a. action where the management of the firm and/or an external party buys all of the assets of a business financed largely with equity. b. restructuring action whereby a party buys all of the assets of a business, financed largely with debt, and takes the firm private. c. firm pursuing its core competencies by seeking to build a top management team that comes from a similar background. d. firm restructuring itself by selling off unrelated units of the company's portfolio.

Answer 1

Answer:

a restructuring action whereby a party buys all of the assets of a business, financed largely with debt, and takes the firm private.

Explanation:

A leverage means taking a loan to consummate a deal. So a leveraged buyout is when an entity takes a loan in order to buy all the assets of a firm and take it private.

Leveraged buyout is practices by parties that do not have enough funds to purchase a company, but they see a high return of Investments over time.

So they take a loan to buyout the company in the hope that returns will eventually cover the loan taken