leveraged finance

leveraged finance
Finance where the level of debt provided is more than would be considered normal. The lenders in leveraged finance transactions are therefore considered to take more risk than normal, and consequently charge their borrowers a higher margin. As a result, borrowers will usually only wish to use leveraged finance to achieve a specific objective (such as the acquisition of a company or business) likely to generate sufficient returns to compensate for the high margin. The detail of what constitutes leveraged finance (for example, the margin) will vary between lenders and the sectors they lend to. It will also depend on the particular features of the transaction.

Practical Law Dictionary. Glossary of UK, US and international legal terms. . 2010.

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  • leveraged buyout — leveraged buy·out / bī ˌau̇t/ n: the acquisition of a company usu. by members of its own management using debt to finance the purchase of equity with debt to be paid by future profits or sale of company assets Merriam Webster’s Dictionary of Law …   Law dictionary

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  • leveraged buyout — Corporate acquisitions in which the acquiring company borrows most or all of the funds needed to finance the purchase. In a typical leveraged buyout, the buyer intends to repay the finance debt from funds gained from either the sale of assets… …   Financial and business terms

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