Leveraged Buyout — acquisition financed primarily with debt (60-80% of sources) secured by the target's assets and cash flows, executed by financial sponsors (PE firms). Three drivers of returns: (1) deleveraging — paying down debt with the company's FCF transfers enterprise value from creditors to equity; (2) EBITDA growth — organic and operational improvements; (3) multiple expansion — exiting at a higher EV/EBITDA than entry. Good LBO candidates have stable cash flows, low cyclicality, identifiable operational improvements, a hard-asset base, and headroom in the capital structure for additional debt.