Rating Assignment on Object Finance

Abstract

A leveraged buyout (LBO) is a form of corporate acquisition. The acquirer is generally a company (financial holding) formed ad hoc and controlled by the sponsor, who provides the equity and cooperates with a management team. The acquisition is financed by debt (the ‘lever’), which is secured by the assets and/or cash flow of the target company. This implies that the success of an LBO will depend on the target company’s potential to generate cash flow, as well as on its attractiveness to possible buyers.