Finally, we find evidence that highly leveraged transactions
tend to be associated with lower fund returns, controlling for fund vintage and other relevant characteristics.
Uncertainty over future trading means highly leveraged transactions
are risky and almost impossible to put together in the current climate.
Skeel's projection is based on a recent ABI Poll in which 67 percent of respondents agreed that despite a recent sharp drop in public company filings, corporate bankruptcies will be up in 2007 due to a shake-up of the many highly leveraged transactions
over the past several years, according to a statement from ABI.
'Private equity has been a major driver in sustaining deal activity levels and favouring a bout of highly leveraged transactions
such as the institutional buyout of Saga,' he added.
We then demonstrate the efficacy of the adjusted comparable company method to value a sample of 51 firms involved in highly leveraged transactions
Succeeding chapters give specific examples of the major features of an LBO: financing techniques and incentive structure for highly leveraged transactions
: postacquisition governance anti management: distressed buyout investments: and then a discussion of KKR as an institutional phenomenon.
Despite continued strong supply and demand fundamentals in most property sectors, the credit crunch of late 1998 - which put an abrupt end to many highly leveraged transactions
and forced "name brand" lenders to reconsider their commitments to providing capital for certain transactions has forced a new financing paradigm on virtually all market participants.
Denis (1994) studies two highly leveraged transactions
of Kroger's LR and Safeway's LBO and shows that the improved incentive structure through higher managerial ownership of shares, closer linkage of managerial compensation to firm performance, and increased monitoring provided by LBO specialists at Safeway led managers to generate cash in a more productive manner.
The buying and selling of companies of all sizes has been fueled by a combination of pent-up demand, favorable interest rates, improved corporate profitability and access to financing as a result of new lending strategies spurred in part by an easing of federal regulations on highly leveraged transactions
. For small and intermediate middle-market companies, two additional factors have fueled the increase: the sheer number of businesses in this category and the rising population of displaced executives seeking new ways to earn a living as owners of their own businesses.
The legacy of the highly leveraged transactions
(HLT) of the 1980s is that the value of a business is often viewed only in financial terms.
Loan growth then improved through 1988, but in 1990 and 1991 credit quality problems surfaced with commercial loans, in particular commercial real estate and highly leveraged transactions
The significant number of highly leveraged transactions
in recent years, coupled with the more recent economic recession, may place many once profitable corporations in a net operating loss (NOL) position.