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View Diary: What is a Leveraged Buyout? (44 comments)

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  •  Well, that's not right at all. (2+ / 0-)
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    VClib, BachFan

    A leveraged buyout is where the purchase price is borrowed money where the business itself is the security for the loan.

    Think of buying a home or a car....you put up what you're buying as the security for the loan to buy it.

    An LBO itself isn't a "hostile" takeover, a hostile takeover being takeover opposed by the current management even though there's plenty of shareholders willing to sell, whcih  may think the offer price is too low or may just want to keep their jobs.

    The only thing problematic about an LBO is that it might create a huge amount of debt which tempts a short term perspective of dismantling a company to sell assets just to raise short term cash.

    Romney is campaigning to be President SuperBain; his cure is to cut wages, end pensions, let companies go bankrupt, and let the assets of production go dark or be sold to China. He really thinks thats the best of all possible Americas.

    by Inland on Mon May 07, 2012 at 09:48:33 AM PDT

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