Question

Tim and Andy, wealthy industrialists, borrow money from True Global Bank to acquire Univo Corp. They promise to repay the bank using the assets of Univo Corp. as collateral. In this scenario, Tim and Andy are involved in a____________.

Answer 1

Leverage Buyout

Step-by-step explanation:

A leverage buyout occurs when a company is purchased by using a large amount of debt or borrowed cash to fund the acquisition of such company.

In other words, it occurs when a company purchases another by taking out a loan and uses assets of the acquiring company as a collateral for the new loan .

Hence, Tim and Andy using the assets of Univo corp as collateral portray that they are involved in a leverage buyout.