Hostile Leveraged Buyout

Hostile Leveraged Buyout

The acquisition of a publicly-traded company by a person or group not favored by current management, where the acquisition is financed with debt. Often, the acquirer in a hostile leveraged buyout issues junk bonds in order to raise the capital necessary for the acquisition. Alternatively, the buyout may be underwritten by one or more investment banks. Hostile leveraged buyouts are fairly unusual because most organizations that finance leveraged buyouts prefer that current management remain at the helm to reduce risk.

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hostile leveraged buyout

The purchase of a firm, against the wishes of the acquired firm's managers, in which a small group of investors finances the purchase primarily by borrowing. Although leveraged buyouts have become quite common, hostile leveraged buyouts are unusual because lenders financing takeovers generally prefer that the acquired firms' managements remain, albeit under new ownership.