Leveraged Buyout(LBO)
Presented by:Gopal Krishan 09BS0002792Vikalp Chaudhary 09BS0002685
Leveraged Buyouts
Specialpurposevehicletocarryonbuyout
A
cquisitionofamaturecompany
W
ithobjectivetoexitafter3-7years
R
ealizingveryhighreturns
Significantuseofdebtforfinancing
Verylessamountofcapital
A
ssetsoftargetcompanyusedascollateralfor debt
H
ighlystructureddebtinstruments
M
anagersaregivenstakeinbusiness
Hi
story
L
ess reliance on debt after Great Depression
1
960s: Conglomerate building began
³
Corporate
R
aiders´
A
dvantage of undervalued assets
Prior to
1
980,
LO
B was obscure financialtechnique
L
B
O
was existing in past with the name Bootstrap
M
erits of debt financing attracted businessmen
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