ɪn lˈɛvɚɹɪdʒd bˈaɪaʊts, pˌiːˌaɪkˈeɪz ɪz jˈuːzd ɪf ðə pˈɜːtʃɪs pɹˈaɪs ʌvðə tˈɑːɹɡɪt ɛksˈiːdz lˈɛvɚɹɪdʒ lˈɛvəlz ˌʌp tʊ wˌɪtʃ lˈɛndɚz ɑːɹ wˈɪlɪŋ tə pɹəvˈaɪd ɐ sˈiːnjɚ lˈoʊn, ɐ sˈɛkənd lˈiːən lˈoʊn, ɔːɹ ɐ mˈɛzənˌiːn lˈoʊn, ɔːɹ ɪf ðɛɹ ɪz nˈoʊ kˈæʃ flˈoʊ ɐvˈeɪləbəl tə sˈɜːvɪs ɐ lˈoʊn ˈiː.dʒˈiː., dˈuː tə dˈɪvɪdˌɛnd ɔːɹ mˈɜːdʒɚ ɹᵻstɹˈɪkʃənz.
In leveraged buyouts, PIKs is used if the purchase price of the target exceeds leverage levels up to which lenders are willing to provide a senior loan, a second lien loan, or a mezzanine loan, or if there is no cash flow available to service a loan (e.g., due to dividend or merger restrictions).