Question
In a leveraged buyout (LBO), what is the primary source
of funds used for the acquisition of a company?Solution
As the name suggests, the primary source of funds used to finance the acquisition of a company in a LBO is debt. The acquiring company uses a significant amount of debt to finance the acquisition, with the intention of using the cash flows from the target company to pay down the debt.
A owes B Rs 1000/- but the debt is barred by the Limitation Act. A sign a written promise to pay B Rs 500 on account of debt:
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