Prior to this assignment I had not heard of a leveraged buyout before. According to myaccountingcourse.com the definition of a leveraged buyout is, “the purchase of a company using a large amount of debt or borrowed cash to fund the acquisition”. In simpler terms a company can use a loan and use it buy another company, rather than using its own money.

One of the examples of a leveraged buyout was Clear Channel and Bain Capital. In 2006 Bain Capital and Thomas H. Lee Partners acquired Clear Channel for $27 billion. Clear Channel was the nation’s largest radio station owner prior to this buyout. The deal wound up getting messy and the firms involved went to court. Once the deal was worked out it ended up being one of the largest buyouts in media history. This company is now known as world wide as iHeartMedia, Inc. Most commonly people refer to listening to music on the iHeartRadio app.

Leveraged buyouts happen quite often in order for certain companies to grow and expand. These purchases are beneficial for the buyer because they spend less of their own money and they receive a higher return on their investment to help companies turn around.