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 fost4434@bellsouth.net
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