BizTerm Definition
Reverse LBO
Full Definition

A common investment strategy is for the management of a company or a financial group to acquire a company using debt. Buyouts are usually highly leveraged, hence the name LBO. When the owners decide to use the IPO market to reduce the company's debt load, the process is called a reverse LBO, because they are replacing debt with equity. They are able to accomplish this only if they have improved the operations of the company sufficiently to attract public equity holders.


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