Eli5:How is taking a company private through a lbo different from the company buying back its shares? PS: I’m just a beginner in the finance field, just wanna know the difference!
In: Economics
The big difference is who buys the stock. In an LBO it is one company buying another company, taking up huge loans in order to do so. However in a stock buyback it is the company itself which buys its own stock. This is done as a service to its shareholders to drive the price up. The remaining shareholders will then sit on a bigger portion of the ownership.
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