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LBO is practitioner shorthand for leveraged buyout — and, by extension, for the model, the debt package and the PE deal style. “Run the LBO” means underwrite debt capacity and equity returns, not merely “buy the company.”
In a bank or PE meeting, LBO means three stacked things:
Search queries for “buyout” almost always intend this cluster, not a share buy-back.
“Run an LBO at 5.5x” means: assume the credit market will lend 5.5× EBITDA, solve for equity cheque, and see if IRR clears the hurdle at a stated exit multiple.
Illustration only. What the phrase contains.
Associate: “LBO works at 7.0x entry if we get 5.0x debt and exit 8.0x in year five with 6% EBITDA CAGR.” That single sentence smuggles leverage, CAGR, multiple expansion, and hold period. It does not mention interest cover, which is where the model actually dies.
LBO ≠ MBO. An MBO can be an LBO; an LBO can be a sponsor-only buyout with management owning 5% sweet equity. LBO ≠ distressed. Most buyouts are of healthy companies.
IC jargon; recruiting (“LBO modelling”); news headlines about take-privates.
The abbreviation erases covenant detail, PIK vs cash interest, and whether “EBITDA” is locked-box adjusted. Never confuse a 20-minute LBO sketch with a credit-approved structure.
Dazur does not replace an LBO model. It feeds one: a defensible earnings and cash bridge so “the LBO works” is a statement about a real company, not a teaser cell.