: The assets of the acquired company (and sometimes the acquirer) serve as collateral for the loans.
: The cash investment from the PE firm, usually 10%–40% of the deal. The LBO Lifecycle leveraged buyout
: The "leverage" comes from using a small amount of equity—typically provided by a financial sponsor like a private equity (PE) firm—and a large amount of debt. : The assets of the acquired company (and
The "capital stack" in an LBO is often layered by risk and repayment priority: leveraged buyout