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Operating & Non-Operating Activities

The take over...

Question

The take over of a company in which most of the purchase price is paid with borrowed money is referred to as __________.

A

Hostile takeover

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B

Illegal takeover

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C

Leveraged buy-out

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D

Management buy-out

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Solution

The correct option is C Leveraged buy-out
A leveraged buy out (LBO) is financial transaction in which a company purchased another company by using the borrowed money.
A leveraged buyout is the acquisition of another company using a significant amount of borrowed money (bonds or loans) to meet the cost of acquisition.

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