Structure Finance and Leverage Buyout

Author: Adam                            Updated: 27/05/2019

Structured finance includes a set of complex financial instruments that several kind of market actors offer to borrowers whose needs are too sophisticated and unique to be satisfied trough a simple loan. As consequence, this finance instruments implemented are more complex and risky.

Leveraged buyouts with financing allowed to a SPV (NewCo) by a bank or an institutional investor for the purpose of taking over another company. Cash flows deriving from the acquired company are used both as collateral as debt repayment.

Common Features of structure finance:

Benefits of Structure Finance

Main Actors in the Markets

LBOs deal can differ in terms of who carries out the acquisition and whether the actor is already inside or outside the target to LBO, MBO(Management), MBI(buyin), FBO, FBI.

Types of leverage acquisition.

The high amount of debt used makes the transaction very risky, both in terms of Loss given default, due to few collaterals provided, and probability of default.

The procedure of LBO

procedure of LBO

Key features of an ideal target for an LBO

GOOD CONDITIONS FOR LBOs

Values of LBO