Alternative investments refer to financial assets that fall outside the traditional categories of stocks, bonds, and cash. These can include tangible assets like art and real estate, as well as financial instruments like hedge funds and private equity.
Asset stripping involves acquiring a company whose share price is undervalued relative to its asset value, selling its assets for profit, typically at the expense of other stakeholders.
A Buy-In Management Buy-Out (BIMBO) is a strategic acquisition where existing management, along with external investors, purchase a company, offering a blend of insider expertise and additional capital with more managerial control.
Capital calls are requests for additional money required of investors to fund a deficit. A corporate stockholder has no legal obligation to meet a capital call.
A club deal is a specific type of financial arrangement whereby a small group of investors or financial institutions jointly fund a particular investment, typically in a syndicate arrangement. These deals are common in private equity, venture capital, and large-scale lending.
An in-depth exploration of leveraged buyouts, including definitions, examples, related terms, frequently asked questions, and resources for further study.
A leveraged buyout (LBO) is a financial transaction where a company is acquired primarily using borrowed funds, with the target company's assets often used as collateral for the loans.
A Leveraged Buyout (LBO) involves the acquisition of a company utilizing a significant amount of borrowed money. Typically, the assets of the acquired company serve as collateral, and the intention is to use the company's cash flow to repay the obtained loans.
Management Buy-In (MBI) is the acquisition of a company by an external team of managers, often financed by a venture-capital organization. It involves bringing in new management to revitalize a target company and optimize its operations.
Mezzanine financing is a hybrid form of financing that includes both debt and equity components. It is typically used by companies to fund growth and expansion projects, and it is structured as subordinated debt but often comes with attached equity instruments like warrants or convertible shares.
Private equity firms are investment firms that acquire controlling stakes in companies, typically using leverage, to restructure and eventually sell them for profit.
Venture capital is a form of private equity financing provided by venture capital firms or individual investors to early-stage, high-potential, and high-risk startup companies.
