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LEVERAGED BUYOUTS

Their impact on jobs and wages

Kevin Amess

Sometimes private equity … give the impression of being little more than amoral asset-strippers after a quick buck. Casino capitalists enjoying huge personal windfalls from deals at the same time as they gamble with other people’s futures. (Brendan Barber. General Secretary of Trade Union Congress, 2007)

Introduction

Leveraged buyouts (LBOs) are corporate restructuring transactions involving the transfer of whole companies or company divisions to new owners. There are two key features typical of all LBO transactions: first, a high level of debt, secured against an LBO target’s corporate assets and future cash flows, is used to facilitate an LBO transaction; second, senior management ...

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