Leveraged buyout (“LBO”) or management buyout (“MBO”) financing.
This highly leveraged financing provides for the acquisition of an existing
business by portfolio investors (LBO) or its own management (MBO). It
is usually based on a mixture of the cash flow of the business and the value
of its assets. It does not normally involve finance for construction of a new
project, nor does this type of financing use contracts as security as does proj-
ect finance.
Acquisition finance. Probably the largest sector in structured finance, acquisi-
tion finance enables company A to acquire company B using highly leveraged
debt. In that sense it is similar to LBO and MBO financing, but based on the
combined business of the two companies.
Asset finance. Asset finance is based on ...