This article examines the selected financial tools used by credit managers, examine the LBO marketplace and more specifically it looks at current market conditions and focal points useful to gauging the creditworthiness of LBO transactions. A leveraged buyout LBO occurs when a large amount of debt capital is used to...
A leveraged buyout, or LBO, is an acquisition of a company or division of another company financed with a substantial portion of borrowed funds. In the 1980s, LBO firms and their professionals were the focus of considerable attention, not all of it favorable. LBO activity accelerated throughout the 1980s, starting...
Make sure LBO Sec. 338 elections don't trigger step transaction rules. In on instance article explains that in many LBOs, the sponsor insists that certain target shareholders—for instance, management—become shareholders of Newco. These shareholders, the "rollover" shareholders, are constrained to re-invest a portion of the proceeds (from the sale of...
Information asymmetry between investors and issuers of equity provides motivation and opportunities for issuers to manage earnings around the time of the offering. This study examines earnings management around the time of the equity offering of reverse LBOs. Using a sample of 225 reverse LBOs during 1980-1998, we find significantly...
Prince of Wall Street submits: So the Street-wide forward pipeline of LBO related debt issuance has shrunk to around $70bn and in some weeks has actually increased.  Prices for LBO related bank loans and HY debt have slowly recovered.  This is no doubt because of the opportunistic hedge funds and...
This paper provides information on investing on buyout, which is a form of equity. Buyout investing, also known as Leveraged Buyout or LBO investing, involves the provision of leveraged capital (i.e., a mixture of debt and equity, with an emphasis on debt) and business development assistance to enable the restructuring...
Over the past two years, big chemicals corporations seeking to improve shareholder returns by running more focused businesses have sold assets worth almost $20 billion to leveraged-buyout LBO firms and similar private companies.1 Indeed, in 1999 and 2000 the value of public-to-private chemicals deals ran at about twice the total...
This article work as a special spotlight on management buyouts. A management buyout is a form of leveraged buyout LBO used to transfer ownership of a company. MBO transactions usually rely on debt instruments to finance a significant portion of the purchase price, consequently, the majority of these types of...
LBOs are financial techniques that require debt to acquire another entity. Several factors contributed to the emergence of this concept. There are basically three LBO models. These are financial buyers, LBOs & breakup values and strategic LBOs. All these models have been discussed in length in this article. However, various...
Mark McQueen Wellington Financial submits: On Monday I promised to offer the deal group a few simple themes to help them “split the difference” that separates a closed BCE BCE/LBO deal from the failed version. I hate the macho theater of negotiating, and our firm is - as a...
This paper investigates market reactions after Public to Private (P2P) announcements in the European market, using a data set from 1996-2002. Furthermore, different sources of value creation for pre-P2P shareholders are analyzed. The results of cross-sectional regression support the agency cost theory as companies with a high pre-P2P free float...
Eric Savitz (Barron's) submits: A down turn in stock prices and the virtual shut-down of the LBO business has resulted in a sharp reduction in tech sector M&A activity, according to a new report by The 451 Group. In Q2, according to 451 analyst Brenon Daly, overall tech...
2003 was huge for asset-based lending ABL. Issuance ballooned because "Fallen angels" scrambled to put together credits that were palatable to ABL players (no one can ignore the blue-chip factor), and because bankruptcies relegated issuers to the debtor-in-possession DIP column. But issuance also jumped on the back of a bubbling...
Timothy Siegel submits: Between the subprime meltdown, potential losses from banks getting stuck on the LBO bridge and losses from loans to builders, investors are beginning to wonder if there is any part of the financial services sector worth serious consideration. Perhaps the place to look is down on the...
Last October, I wrote an article titled "VMware as LBO Opportunity for EMC?"In that article, I projected Q4 revenues for VMware to be about $200M, with the resulting FY2006 total VMware revenues of about $677M. Needless to say, I was a bit on the low side.Last month, EMC announced their...
NEW YORK (<a href="http://resources.bnet.com/index.php?source=Reuters">Reutersa>) - Goldman Sachs GS has raised $10 billion to create a fund that will invest in loans used to back leveraged buyouts and take advantage of a gap in the markets caused by the credit crisis, according to a Financial...
Roger Ehrenberg submits: The weak dollar has been a source of much consternation, at least for me, over the past year. There are those who say "Who cares; a weak dollar helps exports," and "You need to keep pushing down interest rates until the economy recovers and we work...
Remember the scene in the movie "M*A*S*H*" when Painless the dentist decides to commit suicide by downing the poisonous "Black Capsule?" Following a Last Supper-style scene with his cronies and some tender nursing care, however, Painless comes back to life. Well, that's sort of what what Harvard...
Sallie Mae, the largest U.S. student-loan company, is talking with private equity firms about a potential leveraged buyout. A LBO would be unusual for a financial company because it would require it to take on more debt, which can cut into the profit margins of a lender like Sallie...
