Le LBO : comprendre le levier du Private Equity

LBO (Leverage Buy-Out) is a flagship strategy of Private Equity. It involves buying a company by partially financing the operation with bank debt.

The objective is twofold:

Increase the value of equity through debt repayment;

Optimize profitability by improving the operational performance of the company.

An LBO generally brings together:

A financial investor (Private Equity fund);

One or more operational leaders;

Lender institutions.

This type of operation allows the manager to regain control of his company while partnering with an experienced investor. For funds, the LBO is a powerful value creation tool when the strategy is well executed.