A recent article in the Harvard Business Review discusses a concept called the venture buyout or VBO. Does that acronym remind you of another one, maybe the LBO? If so, there are some comparisons.
“Conceptually, VBOs have parallels with the leveraged buyouts (or LBOs) that rose to prominence in the 1980s,” the authors write. “At its core, a VBO involves an established company partnering with a venture capital firm to spin out an internal venture. A VBO brings high-risk growth capital to drive accelerated revenue growth and superior unit economics, much as an LBO deploys high-yield levered capital to drive increased cash flows and earnings.”
Click here to access the article.