Leveraged Management Buyout

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Leveraged Management Buyout

A tactic in which the senior management of a publicly-traded company borrows heavily to buy all of the company's shares outstanding. A leveraged management buyout gives the management complete control of the company and allows it to operate without recourse to shareholders. Most management buyouts are leveraged. It is a form of going private.
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In early 2009, prospects for leveraged management buy-outs looked bleak, with many banks closed for new business in the face of rapidly rising default rates.