Evidence from Highly Leveraged Transactions
that Became Distressed," NBER Working Paper No.
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.
The efficacy of the adjusted comparable company method is confirmed on 51 highly leveraged transactions
(HLTs) from Kaplan and Ruback (1995).
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.
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
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.
Admittedly, these record junk volumes were more an outgrowth of the large HLTs, or highly leveraged transactions
, that were a hallmark of the 1980s than they were of middle-market companies' ongoing financial needs.
These efforts include the phasing out of the reporting of highly leveraged transactions
that increase the amount of noncumulative perpetual preferred stock that bank holding companies may include in tier 1 capital and undertaking, in conjunction with other federal bank and thrift regulatory agencies, the Regulatory Uniformity Project.