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Are LBO and share repurchase two different labels for the same process? If not, please differentiate....

Are LBO and share repurchase two different labels for the same process? If not, please differentiate. Thank you

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Answer #1

No, LBO and share repurchase are two different terms

LBO

LBO refers to acquisition of another companies shares by borrowing to meet the cost of acquisition. The deal is structured so that the target company's assets and cash flows are used to pay for most of the financing cost

Share repurchase

Share repurchase (also know as buyback) is purchase companies own shares using excess cash availabe in companies balance sheets. Share repurchas reduce the cash in the balance sheet on the asset side and there is a reduction in share capital on the liabilities side

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