: Secured by assets and paid first; carries the lowest interest rates.
: The cash investment from the PE firm, usually 10%–40% of the deal. The LBO Lifecycle leveraged buyout
: The assets of the acquired company (and sometimes the acquirer) serve as collateral for the loans. : Secured by assets and paid first; carries
: The future cash flows of the acquired business are used to pay down the interest and principal of the debt over time. leveraged buyout
: The "leverage" comes from using a small amount of equity—typically provided by a financial sponsor like a private equity (PE) firm—and a large amount of debt.