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Advantages to private equity for LBO's include all of the following except: LBOs eliminate those pesky shareholders, who, because of their q-t-q needs, fail to

  1. Advantages to private equity for LBO's include all of the following except:
    1. LBOs eliminate those pesky shareholders, who, because of their q-t-q needs, fail to see the big picture or the long term.
    2. LBOs can lower WACC by eliminating costly equity.
    3. Over time, debt is lowered or eliminated through cash flows from the acquired firm.
    4. Usually the assets are left "as-is" and can be used as equity claw-backs later.
    5. Because private equity use of near-100% leverage, returns to private equity investors are very high and worth the added risk of leverage.

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