LBO "Love Letter"

An LBO "Love Letter" refers to a letter sent by a prospective PE buyer offering to enter negotiations to acquire the target company through a leveraged buyout (LBO). LBO Love Letters typically are sent to companies who previously were not actively seeking to sell themselves. Upon the receipt of an LBO Love Letter, a company's Board of Directors may seek advice on the company's strategic options, including a formal M&A process or agreeing to a period of exclusive negotiation with the private equity firm that approached it. In doing so, an LBO Love Letter can put the company "in play" and attract rival suitors and M&A bids.