A company always has shareholders. A privately-held share simply changed hands in private transactions, rather than in the public stock markets. So an LBO happ

A company always has shareholders. A privately-held share simply changed hands in private transactions, rather than in the public stock markets. So an LBO happens when a PE buyer makes a sufficiently attractive offer (privately) to the shareholders. If they offer you 50% over what you think your own business is worth, you probably would take it, right? That’s the BO in LBO. This large amount of money is typically acquired through debt - “leverage” - which is the L in LBO. The classic coup de grace is to then load the giant loan onto the books of the acquiree and let them sink.