Leveraged Buyout: A leveraged buyout (LBO) refers to the purchase of a business using debt (often referred to as leverage). The notion of leverage as debt comes from the buying power the debt gives a relatively small amount of equity.
You may find this Investopedia definition interesting, but I would caution that I have rarely seen deals with as little as 10% equity, as its definition suggests.
In the middle market arena, deals typically utilize something more in the range of 20 to 30% equity.
A leveraged buyout typically includes several tranches of capital, including most of the following: senior debt, junior secured debt, mezzanine debt, seller financing or earnout, and the equity contribution.
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