Question

Who is responsible for the debt in an Leverage buyout? General Partners / Newco or the...

Who is responsible for the debt in an Leverage buyout?

General Partners / Newco or the merged firm / Newco Management / Lenders and Debt holders / Limited Partners

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Answer #1

Answer:

New Company or the merged firm will be responsible for the debt in an Leverage Buyout.
A leveraged buyout (LBO) occurs when someone purchases a company using almost entirely debt. The purchaser secures that debt with the assets of the company they're acquiring and it (the company being acquired) assumes that debt. Therefore, in the question, the acquired company will be the new company and it will assume the debt, hence, responsible for the debt in the leverage buyout.

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