Case Study Topic (USA)
A leveraged buyout (LBO) is that a company borrows a significant amount of debt to acquire another company. In a leveraged buyout (LBO), the ratio of debt-to-equity is usually 9. The loans use the assets of both the acquired company and the acquiring company as collateral. The emergence of the high-yield bond market leads to the dramatic surge in LBO activities in the 1980s. By the end of the decade, the junk bond market imploded because of several high-profile corporate bankruptcies, leading to the cool off of LBOs. In the mid-2000s, the growing pool of private equity firms and the emergency of asset-backed securitization led to the resurgence in the volume of LBO deals, as the buyout market transitioned from high-yield bond financing to financing conducted primarily through syndicated leveraged loans. Find a leverage buyout deal that you are interested in and analyze the following:
(1) Briefly introduce the buyer and the seller of the leveraged buyout deal.
(2) The purpose and deal characteristics of leveraged buyouts.
(3) The sources of value creation in LBOs.
(4) LBO targets valuation.
(5) the relationship among the value paid for an LBO target, financing requirements, and the returns to buyout investors.
(6) the macro factors that affect the LBO deal.
(7) the exit strategy.
In a word, please collect useful information to do a thorough analysis of a leveraged buyout deal.
Format
use 3 to 5 pages to present your analysis. Please use 11 pt font size, double space in your report. Please specify the title of your report the firm’s name that you analyze in your report. Please add figures or graphs if necessary and separate your report into sections if needed.
Professor Rules
do not copy and paste from other papers or websites. You must document all of your source material. If you take any text from somebody else, you must make it clear the text is being quoted and where the text comes from. You must also cite any sources from which you obtain numbers, ideas, or other material. If you have any questions about what does or does not constitute plagiarism, ask! Plagiarism is a serious offense and will not be treated lightly. Fortunately, it is also easy to avoid and if you are the least bit careful about giving credit where credit is due you should not run into any problems. I will run a plagiarism check when I receive your project report. A percentage of 40% or more will be classified as plagiarism.
I’ve attached the lecture slides and notes for reference material. Feel free to message me with any questions or concerns. thank you!
