Talk:Leveraged buyout/Archives/2013

Biased stuff and wrong stuff

Can't people stop bringing in their bias that LBO's are something evil into these articles? And can people please try to stick to facts?

What is this phrase: ".... 5 to 10 years. So this is not a long term investment. They have to make their money quickly". Who judges what long and short term is? 10 years is fairly long compared to someone setting up a flower shop and fairly short for an infrastructure investment.

Then this factually wrong stuff like: "the acquired company goes out of existence". What someone apparently means is an asset deal upon insolvency but this has nothing to do with a plain vanilla LBO.

Additionally: anyone doing an investment will require that whatever he buys is worth the price he pays for it, i.e. the purchase price. So if he uses debt to part finance the acquisition (as all corporate companies do with any investments ....), it is completely logical that he allocates that part of the debt that he needs for this very acquisition to this very target. By the way, this is exactly the same that any private person does when buying a house and taking up a mortgage: The mortgage is secured with the assets (the house) as a collateral.

I am sure people disagree with the above but can I please ask to discuss here on this talk page before throwing in wrong and biased stuff in the article?

∼∼∼∼ — Preceding unsigned comment added by Jaeljojo (talk • contribs) 12:23, 13 January 2013 (UTC)

Ups, apologies. I had read additions that had already been undone by other users.Jaeljojo (talk) 12:47, 13 January 2013 (UTC)

Removed Inaccurate Statement

Removed this: "However, as long as the fees for arranging a debt package still constitute a significant part of the income of a bank in the course of LBO financing, banks will always be mis-incentivized to finance many transactions with high debt volumes as opposed to financing good transactions."

It is provided without citation. It also it highly inaccurate: Banks will never be incentivized to lend money into situations where that money would default. Also the "fees" (and interest) the banks charge are the cost of lending. They can only charge the market cost of lending money with the specific risk profile that an LBO represents. — Preceding unsigned comment added by 98.113.191.220 (talk) 02:36, 29 April 2013 (UTC)