Definition: Leveraged Buyout LBO



The acquisition of another company using a significant amount of borrowed money (bonds or loans) to meet the cost of acquisition. Often, the assets of the company being acquired are used as collateral for the loans in addition to the assets of the acquiring company. The purpose of leveraged buyouts is to allow companies to make large acquisitions without having to commit a lot of capital.


Equity Borrowing Surges

Margin debt (borrowing to buy stocks) climbed by $38.2 billion in September through November according to the NYSE. This was the biggest in 3 months since mid-2007.

Overall though, equity debt is much below market peak levels.

This could fuel equity markets and be a nice bullish sign for us.