I will never understand how leveraged buyouts are legal. I mean it somehow makes sense in its original form where workers were buying out the patron but now it is just weird.
Edit: No this is actually fine if you think about it, it just feels wrong somehow.
They should only be able to use their own capital for the loan, not the company they are buying putting up the majority of the capital. That’s the problem with leveraged buyouts: you’re effectively putting the company up for liquidation when that happens, because the buyer is likely going to gut and shutter the company so they end up with a profit in the end.
I just feels weird that you can use the value of the company you buy to buy said company. It just “feels” weird that you can get a loan and use whatever you buy as leverage.
Now that I am typing that out that is not really different from getting a loan to buy a house. Never mind, I guess it just seems weird when it is such an insane sum of money ¯\(ツ)/¯
I will never understand how leveraged buyouts are legal. I mean it somehow makes sense in its original form where workers were buying out the patron but now it is just weird.Edit: No this is actually fine if you think about it, it just feels wrong somehow.
you don’t understand why allowing someone to take on debt to purchase a business is legal?
They should only be able to use their own capital for the loan, not the company they are buying putting up the majority of the capital. That’s the problem with leveraged buyouts: you’re effectively putting the company up for liquidation when that happens, because the buyer is likely going to gut and shutter the company so they end up with a profit in the end.
Ask Toys R Us about the process.
i take it you’ve never dealt with the sale of a small business
I just feels weird that you can use the value of the company you buy to buy said company. It just “feels” weird that you can get a loan and use whatever you buy as leverage.Now that I am typing that out that is not really different from getting a loan to buy a house. Never mind, I guess it just seems weird when it is such an insane sum of money ¯\(ツ)/¯