Eli5: How an individual take a loan to buy a company, and have the purchased company responsible for paying back the interest?

Question

Can the company also be made responsible to pay back the loan itself, as well as the interest?

In: 19

Answer 1

Lots of companies carry debt, they issue bonds etc. the shareholders aren’t on the hook for this debt.

The company can decide to borrow money and do a stock buyback, reducing the number of shareholders.

In the same way, someone who wants to buy an entire company can arrange for the company he is buying to borrow money and buy out some of the shareholders, and use his money to buy out the rest.

In other words, it’s a combination of buying out most shareholders and a stock buyback at the same time