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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
- 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 see the big picture or the long term.
- LBOs can lower WACC by eliminating costly equity.
- Over time, debt is lowered or eliminated through cash flows from the acquired firm.
- Usually the assets are left "as-is" and can be used as equity claw-backs later.
- Because private equity use of near-100% leverage, returns to private equity investors are very high and worth the added risk of leverage.
- LBOs eliminate those pesky shareholders, who, because of their q-t-q needs, fail to see the big picture or the long term.
- LBOs can lower WACC by eliminating costly equity.
- Over time, debt is lowered or eliminated through cash flows from the acquired firm.
- Usually the assets are left "as-is" and can be used as equity claw-backs later.
- 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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