Business Studies, asked by abdullahkillerboy60, 9 months ago

in your opinion what are the two most important characteristics of an Levrage buyout candidate?​

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Answered by jaybhayevishal13
0

Answer:

leveraged buyout (LBO) is one company's acquisition of another company using a significant amount of borrowed money to meet the cost of acquisition. The assets of the company being acquired are often used as collateral for the loans, along with the assets of the acquiring company. The use of debt, which normally has a lower cost of capital than equity, serves to reduce the overall cost of financing the acquisition. The cost of debt is lower because interest payments often reduce corporate income tax liability, whereas dividend payments normally do not. This reduced cost of financing allows greater gains to accrue to the equity, and, as a result, the debt serves as a lever to increase the returns to the equity.[1]

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