A more thorough explanation:

Definition: A leveraged buyout is a type of acquisition where a company is purchased using a significant amount of borrowed money, often with the assets of the company being used as collateral for the loan. The goal of a leveraged buyout is to use the acquired company's assets to generate enough cash flow to pay off the debt used to purchase it.

Example: A private equity firm wants to acquire a company for $100 million. Instead of using their own money, they borrow $80 million from a bank and use the assets of the company they are acquiring as collateral for the loan. The private equity firm then uses $20 million of their own money to complete the purchase. The acquired company is then expected to generate enough cash flow to pay off the $80 million loan.

Explanation: The example illustrates how a leveraged buyout works. The acquiring company uses borrowed money to purchase the target company, with the assets of the target company being used as collateral for the loan. The goal is to use the cash flow generated by the target company to pay off the debt used to purchase it. This type of acquisition can be risky, as the acquired company must generate enough cash flow to pay off the debt, and if it fails to do so, the acquiring company may face financial difficulties.