The ideal company that can carry out LBO redemption should have the following features:
- Operate in a stabilized sector where high capital expenditure is not necessary;
- The market position of the company should be well established so that it is able to generate a high and predictable level of cash flows necessary to service its debt;
- A stable asset base, especially fixed assets. These assets can both serve as collateral and can be repaid and thus reduce debt;
- Potential for growth or at least maintenance of results;
- Low debt;
We carry out buyout transactions by groups of managers. We help prepare the project from the point of view of their needs and those of the capital and debt providers.
We attract investors and banks that finance the transaction. Leveraged Buy Out / Management Buy Out consists of purchasing of the business by external investors, or the board of directors of the company, using borrowed money. For this reason, the amount of capital that the acquirer must engage is low. It usually ranges from 10 - 25% of the value of the whole transaction. The debt is "transferred" to the LBO-financed company and repaid within a few (five to six) years, through profit or, more specifically, the free cash flow that the company will generate. In a nutshell, that’s how to describe a leveraged buyout operation.