A leveraged buyout (LBO) is a financial transaction where a company is acquired using primarily borrowed money — typically 70-90% of the purchase price comes from debt.
The process: Select a target company (with stable cash flows and strong assets), structure the financing (70-90% debt, rest equity), complete the acquisition, improve the company's efficiency and profitability, repay debt from company cash flows, and exit (sell after a few years for profit).
The goal is to achieve high returns with minimal equity investment. However, it's a high-risk strategy — the massive debt burden can push the company into financial distress if things go wrong.
In Bangladesh, the LBO concept is not yet widely practiced. Private equity and venture capital are still in their early stages of development.