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A leveraged buyout or LBO is a restructuring strategy whereby a party, typically a private equity firm, buys all of a firm's assets in order to take the firm private. ( Hitt, Ireland & Hoskisson, p. 207)

A leveraged buyout also prevents the company's stock from being publicly traded. In 2006, HCA quickly agreed to a 21 billion leveraged buyout from several private equity firms, including Bain Capital, Kohlberg Kravis Roberts & Co., and Merrill Lynch. The deal also included the assumption of 11.7 billion in debt. All stockholders received 51 in cash and a premium of 6.5 percent of the previous day's closing price. However, this price was below the price at which the stock traded in late 2005 and early 2006. ("HCA Agrees," 2006) HCA is only one...

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