A leveraged buyout (LBO) is a financial transaction where a company is acquired using a significant amount of borrowed money. In this process, the acquiring firm uses the target company's assets as collateral for the loans. The goal is to improve the company's performance and eventually sell it for a profit, allowing the investors to pay off the debt. LBOs are often conducted by private equity firms, which specialize in buying and restructuring companies. By using leverage, these firms can amplify their returns on investment, but they also take on higher risks due to the debt involved in the acquisition.