Reverse Leveraged Buyout

DEFINITION of 'Reverse Leveraged Buyout'

The offering of shares to the public by a company that was taken private during a leveraged buyout. In the leveraged buyout, a private equity firm would have purchased the publicly traded company by borrowing heavily (using leverage) to purchase all the company's stock and using the target's assets as collateral.

BREAKING DOWN 'Reverse Leveraged Buyout'

After the LBO, the private equity firm repackages the company while it is privately owned and can't be as heavily scrutinized by the public. It then offers the company's shares for sale again in an RLBO. A number of academic research studies covering the period from 1980 to 2000 found that shares issued in RLBOs performed well after the IPO.

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RELATED FAQS
  1. How is a leveraged buyout different from a buyout?

    Learn about leveraged buyouts and circumstances under which an acquiring company wishes to pursue a buyout funded mostly ... Read Answer >>
  2. How does a company decide whether it wants to engage in a leveraged buyout of another ...

    Learn how leveraged buyouts can be profitable by taking companies private, and understand why the debt loads in these deals ... Read Answer >>
  3. How does the privatization of a publicly traded company work?

    Find out how a publicly traded company can privatize and remove itself from listed stock exchanges and out from under the ... Read Answer >>
  4. How are leveraged buyouts financed?

    Understand the basics of a leveraged buyout, who is involved in executing the transaction and some of the various ways to ... Read Answer >>
  5. What are the risks of having both high operating leverage and high financial leverage?

    In finance, the term leverage arises often. Both investors and companies employ leverage to generate greater returns on their ... Read Answer >>
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    The most recognized transition between the private and public markets is an initial public offering (IPO). Through an IPO, ... Read Answer >>
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