《《Buyouts as an Investment Opportunity》.pdfVIP

BUYOUTS AS AN INVESTMENT OPPORTUNITY What Is A Buyout Investment? 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 restruc- turing of existing businesses. Historically, most buyouts were management buyouts of family firms. When an aging founder wished to sell his firm, the managers would borrow money, often from a bank, and buy it. Some leveraged buyouts appeared in the 1970s, but it was not until the 1980s that buyout partnerships became prevalent. Wide ranges of investment activities are now classified as buyouts. These include: • Management buyouts and buy ins (MBOs and MBIs) • Investment in industry consolidations and other corporate restructurings • Acquiring privately held firms which are then recapitalized and expanded • Buying and reinvigorating publicly traded businesses • Buying an agglomeration of businesses and divesting the non-core divisions • Financial engineering to suitably modify a company’s capital structure This list is not, and cannot, be exhaustive The use of leverage is merely a financing technique and not a type of business activity. The LBO industry