Question

why is too much debt disadvantageous in an LBO?

why is too much debt disadvantageous in an LBO?
Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Too much debt disadvantageous in an LBO: The acquiring company may need to borrow money to finance the purchase of the new company. This move will affect the debt structure of the acquirer and lead to an increase in loan payments on the company’s books. It may force the company to cut back on their expenses elsewhere. For instance, they may be required to lay off some employees or even end up selling a part of their business so as ensure they remain profitable. Moreover, the funds used by the company for the business buyout takes money away from internal development projects.

Please give thumbs up. It will help me

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Search the term "leveraged buyout." What is a leveraged buyout (LBO)? Why is the word "leveraged"...
Search the term "leveraged buyout." What is a leveraged buyout (LBO)? Why is the word "leveraged" included in the title of this acquisition method?
Which one is the most obvious reason why trading too much can be bad for your...
Which one is the most obvious reason why trading too much can be bad for your overall return? On average, people make bad trades that attenuate returns Trading too much entails too much trading costs which hurts the net return People who trade too much seek too much risk People who trade more suffers more from psychological biases
Many of us accept that too much income inequality is bad for the economy. Why might...
Many of us accept that too much income inequality is bad for the economy. Why might an economist argue that too little income inequality is bad for the economy?
why too much potassium (method of lethal injection) in your extracellular fluid would be fatal?
why too much potassium (method of lethal injection) in your extracellular fluid would be fatal?
Why do economies and governments strive for economic growth? Cann too much growth be a bad...
Why do economies and governments strive for economic growth? Cann too much growth be a bad thing?
Why is using too much bacteria not good for streak, pour, and spread method? What can...
Why is using too much bacteria not good for streak, pour, and spread method? What can ir cause to each one? And how much is enough? What is the difference between them?
Lin and Joe have way too much debt. It has become a huge burden for them....
Lin and Joe have way too much debt. It has become a huge burden for them. Joe dies in a single car accident 6 months after buying a $500,000 life insurance policy. Lin insurance is able to prove that his death was a suicide, how much will Lin be obligated to pay? Select one: a. the policy’s cash value. b. the present value of the expected proceeds. c. nothing, the policy is void. d. the face value of the policy....
Which of the following contribute to eyestrain? All contribute Too much accommodation Low light Too much...
Which of the following contribute to eyestrain? All contribute Too much accommodation Low light Too much vergence
Some people believe there is too much government regulation of employee benefits and others say there...
Some people believe there is too much government regulation of employee benefits and others say there is not enough. Do you think there is too little or too much government regulation? Provide at least one specific reason why there is too little or too much. Take a position arguing either for more or less regulation.
Discuss why corporate debt offerings are typically much more common than equity offerings and typically much...
Discuss why corporate debt offerings are typically much more common than equity offerings and typically much larger as well.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT