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Going Private: How does it work?
Most going private transactions are financed with borrowings banks or other institutions. In the typical transaction, a company’s assets are used as collateral for the debt and its cash flows are used to service it. Management is almost always a participant in going private transactions, along with other parties contributing financing or other buyout expertise. Will this structure work for you? This 7 page white paper discusses Deal Structure, Process Flow, Due Diligence, virtually everything you'd need to brush up on if considering this option. Don't miss out on this integral primer! Deal Structure Most going private transactions are financed with borrowings banks or other institutions. In the typical transaction, a company’s assets are used as collateral for the debt and its cash flows are used to service it. Management is almost always a participant in going private transactions, along with other parties contributing financing or other buyout expertise. Going private transactions can take a variety of forms, but usually have a common theme. Generally, the transactions result in an ‘affiliate’, either an existing major stockholder or a management group, acquiring all of the stock of the public company. Equity funding for such corporate purchases is often provided by a sponsor (typically private equity funds that invest on behalf of institutions and wealthy individuals). Debt financing is provided by commercial banks or through issuance of high yield debt, or so called ‘junk bonds’. Until recently the junk bond market had been in poor shape, making the cost of doing a corporate purchase prohibitively high. But enthusiasm for junk bonds has been on the rise, with investors putting more money into high-yield funds like never before. As a result, spreads -- the difference between Treasury yields and junk bond yields -- have contracted sharply. And because Treasury yields have fallen, the absolute yields on junk bonds have fallen sharply as well. An ideal transaction would be compromised of the following:
Process Format From a process point of view, a going private transaction has several mileposts. [continued...] Want to know more? Download the White Paper "Going Private: How does it work?" for just $9.95. People who ordered this paper also ordered: |
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