Finance & Investment

Learn Finance: Leverage Buyouts, Divestitures, Spin Offs

Leveraged Buyouts

A leveraged buyout is a financial transaction in which a company is purchased with a combination of equity and debt, such that the company’s cash flow is the collateral used to secure and repay the borrowed money. in other words, it is the purchase of a controlling share in a company by its management using outside capital.

Divestitures

In finance and economics, divestment or divestiture is the reduction of some kind of asset for financial, ethical, or political objectives or sale of an existing business by a firm. A divestment is the opposite of an investment.

Spin offs

A corporate spin-off, also known as a spin-out,or starburst, is a type of corporate action where a company “splits off” a section as a separate business.

 

NB: These terms are useful to this segment because it improves our knowledge of investments as regards acquisitions.

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