Leveraged buyouts happen when a company uses a large proportion of debt to acquire another business, often using the purchased business itself as the collateral for the debt. The typical leveraged use of debt is 50 to 80%. However, it can be as high as 95%. The purchasing company then uses cash from the company to pay down the debt. This transaction is usually complicated and it is prudent to hire a specialist to handle the process. Handling a buyout yourself could lead to disastrous financial implications. If the leveraged buyout's information is wrong or misinterpreted, you can overpay for a firm with insufficient cash flows to support the leveraged debt payments.
Conversely, your business may find itself on the other side of one of these leveraged buyouts. Before this happens, a company should take measures to protect and insulate itself this event. Whichever side you are on, there are leveraged buyouts resources and services that you need to consider before proceeding:
1. Find leveraged buyouts information.
2. Shield or avail your company to leveraged buyouts.
3. Contact a leveraged buyouts provider.
Action Steps
The best contacts and resources to help you get it done
Examine the basics of these leveraged buyouts
Before your company attempts a leveraged buyout, it is imperative that you thoroughly understand everything involved in the process. A leveraged buyouts provider will sometimes not give the most accurate information because they receive a percentage of the sale. Therefore, it is important to discern the basic of the procedure and to get an independent source to evaluate the business.
I recommend: Subscribe to the LBO Wire available at the
Dow Jones Financial Information Services to educate your business on leveraged buyouts. Contact business valuation consultants at
Willamette Management Associates for a independent evaluation of the business's worth.
Contact a corporate attorney for leveraged buyouts
A corporate tax attorney can assist your business in setting up protection against the leverage buyouts. They will help you structure the business to make it either impossible or prohibitively expensive for another company to acquire your business. However, your business may want another company to purchase your business if the terms are favorable.
I recommend: Search for and call a leveraged buyout lawyer in your area through
LBOlawyer.com. Contact the Leverages buyouts specialist at
Hadley Capital if you wish to sell your company through a leveraged buyout.
Hire a leveraged buyouts specialist
If your company wishes to purchase another business using a leveraged buyout, it is imperative to contact a firm that conducts these transactions on a regular basis. If you have in-house talent that can structure and complete the deal, you will still need to attain financing.
I recommend: Call the leveraged buyout consultants at
American Capital or the professionals at
General Electric Commercial Finance to obtain funding for the leveraged buyout.
Tips & Tactics
Helpful advice for making the most of this Guide
- Whenever you use a service no matter what the purpose, it is important that you ask for contact information for past clients to verify their satisfaction with the company. If possible, ask for a leveraged buyouts list of former clients and choose one at random because the company may only give you only information on companies they know for fact were happy with the service.
The official source of Leveraged Buyouts is the Leveraged Buyouts page at Business.com
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