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Buyouts by Private Equity

Merger Arbitrage, 2016, p.328-340

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Title:
Buyouts by Private Equity
Author: Kirchner, Thomas
Subjects: buyouts ; cash merger ; Dividend recapitalizations ; financial engineering ; financial leverage ; merger arbitrage ; private equity funds
Is Part Of: Merger Arbitrage, 2016, p.328-340
Description: Private equity funds always pay cash when they acquire a publicly traded company from public shareholders. Even though buyouts by private equity funds are similar to any other cash merger, they deserve extra attention due to the usually high leverage employed as well as the participation of current management in the buyout group. The rapid ascent of private equity can be explained at least in part by the incentives that its managers receive from their investors. When venture capital or private equity funds are present with some securities, problems can arise when companies are taken private. This chapter provides an example to show these problems. Dividend recapitalizations are a form of financial leverage where a company, after it has been acquired by a private equity firm, issues additional debt and then pays out the proceeds from the debt offering to the private equity funds as a dividend.
Publisher: Hoboken, NJ, USA: John Wiley & Sons, Inc
Language: English
Identifier: ISBN: 9781118736357
ISBN: 1118736354
EISBN: 1118834992
EISBN: 9781118834992
DOI: 10.1002/9781118834992.ch10
Source: Ebook Central Academic Complete

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