5 ms·

Thanks for the thorough but concise summary. > If the buyer wants to do an LBO, they can use the cash to finance it. (Strange how that works!) Agreed. If you

Thanks for the thorough but concise summary. > If the buyer wants to do an LBO, they can use the cash to finance it. (Strange how that works!) Agreed. If you can't figure out what to do with your cash, someone else with less insider knowledge and experience will. AKA they'll rebalance your books, make the tough cuts that you can't, point you in a new direction, and exit at 5-10x their initial investment in a couple of years.

tropo 11y ago
So, Apple? They are sitting on cash.
- mathattack 11y ago
  Carl Icahn [0] was looking at Apple. The company is so big that it would be hard for him to buy it, but he's able to needle it from the sidelines. [0] http://fortune.com/2015/09/30/carl-icahn-buy-apple/ http://fortune.com/2015/09/30/carl-icahn-buy-apple/ Generally this turns into companies doing more dividends and share buybacks.
toyg 11y ago
It's not turning out that way for Manchester United though. The Glazer takeover simply burdened the club with massive debt, did not change anything in terms of actually running the club, and nobody will ever pay 5-10x what the Glazers did. It just enabled them to siphon money out of the club (as well as using it as a financial dump for sketchy funds, but that's pretty common in the football world). Leveraged takeovers are often simple cash grabs by plundering buccaneers.
- mathattack 11y ago
  For an LBO they don't need to be paid 10x. If I borrow 900K to buy a million dollar business, I have only 100K invested in it. Let's say 2 years later I sell the business for 2 million... After paying back the 900K and perhaps 100k in interest I am left with 10x (1 million) of my 100k equity. Of course if the debt kills the company, we all lose.