leveraged-acquisition-financing

Vocabulary Word

Definition

In leveraged acquisition financing, a group or person uses borrowed money, or 'leverage', to pay for the cost of acquiring a company. The goal is to pay the loan back later by using the profits from the company.

Examples in Different Contexts

In corporate finance, 'leveraged acquisition financing' refers to using borrowed funds to acquire another company. A financial analyst might explain, 'The firm is considering leveraged acquisition financing to undertake a major takeover without depleting its reserves.'

Practice Scenarios

Startup

Scenario:

There’s a tech startup for sale with a promising product. The asking price is high, but the potential ROI could be substantial.

Response:

Despite our current budget constraints, using leveraged acquisition financing could allow us to consider this investment.

Finance

Scenario:

With our positive financial records and increased profits, it might be the right time to consider expansion. Perhaps a strategic acquisition is on the cards.

Response:

That sounds like a strategic move. Why don't we consider leveraged acquisition financing for this expansion?