This style of buyout, as with any leveraged buyout, involves heavy analysis on behalf of the acquirer to adequately value the target company’s assets and to make sure that the return on those assets pays for the added cost of debt.
If the target company has significantly undervalued assets and the acquirer has little cash (and so needs debt to fund the purchase), this strategy could be implemented to successfully unlock value.
Investment dictionary. Academic. 2012.
Look at other dictionaries:
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