Mergers Acquisitions, Leveraged Buyout (LBO)

Mergers and Acquisitions, Leveraged Buyouts (LBO's) Using Their Money

When you are considering Merging or Acquiring another company, you can often borrow money to do so based upon the assets of the other company as well as your own.   In a true Leveraged Buyout (LBO) nearly none of the cash/assets come from the acquiring company (or individual).   The combination of operating capital, receivables, inventory and sometimes real estate must be such that pre-determined percentages of each of them combine to equal or exceed the total amount of cash required to complete the acquisition with buy-out of the required stock and often liquidation of debt.  If the numbers work out it is easier and faster than you may think.   The new principal(s) must pass strict background check(s), and have enough cash to cover due diligence costs.   In the rare, perfect scenario, an individual or company could acquire another multi-million dollar company with as little as $20,000 out of pocket.

Through the use or implementation of an Employee Stock Ownership Plan or ESOP, the Seller can command a premium price (NOT a discount) for the sale of the stock,  structure it so that there is no Capital Gains Tax on the sale and allow the company to deduct both principal AND interest on the repayment of the loan which buys them out!  There is a seamless transition of control from the Seller to the Acquiring person or entity. These kinds of Government incentives are extremely rare and should be investigated whenever possible.  The employees become non-controlling partners who now share in a portion of the growth.  Consequently, their performance always improves, Worker's Compensation claims decrease and as they leave, they may cash-out, and their stock returns to the company.

We can help you leverage your acquisition/sale by using the assets of the company you are acquiring/selling, and complete the process very rapidly when time is of the essence.

For more information on any of this material, please call us at (407) 522-0133.

E-mail us at

Return to Home Page
© L&R Funding Co., Rick Foster, 1761 Bent Way Court, Orlando, FL32818-5657