LEVERAGED BUYOUT (LBO)
Leveraged buyout (LBO) is the acquisition of another company using a significant amount of borrowed money to meet the cost of acquisition.
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Mergers refer to the combination of two companies into a single entity, often to create synergies, expand market share, or achieve cost savings. In trading, mergers can significantly impact stock prices, with the acquiring company's stock often falling and the target company's stock rising. Traders use merger announcements to speculate on the deal’s success and potential price movements. Mergers and acquisitions (M&A) activity is a critical driver of market sentiment, especially in sectors where consolidation is common or necessary for growth.