what is leverage buyout in business world? where does PE companies come up with cash for M&A for every bid?

Answer 1

This is a good question - you've found them out! The answer is they don't use their own cash. They get the cash from others and from banks. The following is an excerpt from a very interesting article which can be found at the link provided.

What are private equity firms?
Investment firms that pool money from wealthy investors, pension plans and other institutional investors to buy or take a stake in companies. These firms attempt to find ways to run companies better and sell them later for a profit. Private equity firms will often borrow additional money from banks so they can buy companies and only use a small portion of their own cash. The firms were commonly called leveraged buyout firms in the 1980s.

Essentially a revamped version of the leveraged buyout firms of the 1980s, Private Equity firms buy undervalued or underappreciated companies, fix them up and sell them for a fast profit, sometimes in as little as three years. Their secret sauce is the use of debt — usually as much as 70 cents of every dollar they invest. Because they pile debt onto the companies they buy, private equity firms free up their own cash, allowing them to make additional investments and maximize their potential returns.