Leverage

Formal

A term used to describe a range of techniques for companies whereby one relatively strong part of an entity - cash, assets, profit streams etc - is used as a lever to gain disproportionate advantage, eg takeovers, fund raising exercises. This is using the strong part of a business to ‘leverage’ a much greater total impact that is immediately apparent.

Real-world Example

A company uses $1M of its own cash plus $4M in borrowed funds to buy a $5M asset - leveraging debt to control a larger investment than its own capital alone would allow, which amplifies both potential gains and risk.