Bootstrap Acquisition

Bootstrap Acquisition

A way to finance the acquisition of a publicly-traded company. In a bootstrap acquisition, one buys some shares and then uses them as collateral to borrow cash to buy more shares. These shares are used to borrow more money, and so forth until one owns a majority stake in the company. If one defaults on any of the loans, however, the shares go to the lender. A bootstrap acquisition is a type of leveraged buy-out.