杠杆收购（LBO）

LBO stands for a杠杆收购and refers to the purchase of a target company while using mainly debt to finance the acquisition.

In these types of transactions, the acquirer will opt to put up the target's assets as collateral to raise debt capital to meet the acquisition cost instead of paying with cash. Furthermore, the acquirer will typically want to put up as little equity as possible in the acquisition.

While investors generally dislike large amounts of leverage (it puts strain on a company'scash flow), debt has significant tax deductions. If a company is able to meet its debt obligations,then the return on equityis usually magnified.

Typically you would see private equity firms acquiring targets through an LBO transaction. When they acquire a target, they will sometimes be referred to as financial sponsors.

Also, they would engage the investment banks'IBD division(specifically their leveraged finance团队）以确保融资。因此，如果你是对公司融资感兴趣，您应该对LBO有更深入的了解。

Why introduce so much risk through high levels of leverage?财务赞助商可以实现更多的股本回报率（ROE）和内部收益率（IRR）通过尽可能少的权益。

只要目标能够幸免于债务义务自由现金流is left will belong to all equity holders, and if the value of all equity holders is small, the return will be higher.

During the 1980s - 1990s, when LBOs were hot, debt could make up as much as 90% of the purchase of a business. However, now investors and private equity firms are a bit more risk-averse and, therefore, may use closer to 50% debt and 50% equity to purchase a business.

Generally speaking, private equity firms would target businesses that have stable cash flows, good management, and a large资产基础可能用作抵押品。

However, it is also very common for private equity firms to target businesses infinancial distress and applytheir expertise to turn around and restructure the business until it is no longer distressing.

The overall aimwould be to increase the value of the target so that it could be sold for more money than what was spent acquiring the target.

Suppose the target firm is in the latter category. In that case, the LBO can sometimes be viewed as predatory because the private equity firm is buying a distressed company using its own assets. That's like saying, "I'm going to save you using your own money, but I get all the profits".

The LBO process

There is an element of财务建模for an LBO transaction.

可能与discounted cash flow(DCF) model. However, the key difference between an LBO and a DCF is that in an LBO, you will be stress-testing the target's financial forecast to see how much debt it can handle.

除此之外，LBO还专注于内部回报率。如果IRR不高，那么私募股权公司赞助目标是不值得的。

Lastly, exit公平价值是必不可少的in LBOs as the financial sponsors prefer to approximate the value of their equity at the time they are selling the target (they're not likely to hold the target forever).

带我穿过LBO

在面试中保持高水平的技术概述至关重要。因此，从高级概述开始，并准备根据要求提供更多详细信息。下面概述了高级LBO流程，但请确保您了解该过程的每个部分。

1. 计算总收购价，包括收购目标权益，偿还任何未偿债务以及任何交易费用（例如支付给投资银行和交易律师，会计师，顾问等的费用）。
2. 依据ermine how that total price will be paid, including equity from the PE sponsor, roll-over equity from existing owners or managers, debt,seller financing, etc.
3. Project the target's operating performance over ~5 years and determine how much of the debt principal used to acquire the target can be paid down using the target'sFCF over thattime.
4. Project how much the target could be sold for after ~5 years in light of its projected operating performance; Subtract any remaining net debt from this total to determine projected returns for
5. 股权持有人。
6. Calculate the projected IRR and MoM return on equity based on the amount of equity originally used to acquire the target and the projected equity returns upon exit.

To read the full post, click这里.

杠杆收购：示例

This example will show you how an LBO can increase an acquirer's return on equity. Let's say that you were presented with the option to acquire a business.

This business operates in a stable industry whererevenue streams are unlikely改变。因此，可以肯定地假设其收入将在运营的时间内保持不变。

The business is currently financed by only equity and has no debt. It has a pre-tax income of $1.5 million. The corporate tax rate is 33%, while the acquisition cost would be $10 million.

Through simple calculation, you realize that yournet income would be100万美元，如果您支付了1000万美元，则您的股本回报率为10％。

EBIT：$ 1,500,000

Tax expenses (33%): ($500,000)

Net income:$ 1,000,000

Cost of acquisition: $10,000,000

股本回报：10％

A return on equity of 10% is pretty good! However, when you consult your financial advisor, he recommends that you leverage the target for an LBO. He advises you to meet the cost of acquisition using $9 million in debt at 10% interest and $1 million in equity.

您的财务顾问告诉您，通过引入杠杆作用，您现在必须每年支付90万美元的利息费用，虽然您似乎会获得较低的净收入，但您将拥有更高的ROE。

EBIT：$ 1,500,000

利息花费：（$ 900,000）

利息之后的收入：$ 600,000

Tax expenses (33%): ($200,000)

Net income:$400,000

Cost of acquisition: $1,000,000

Return on equity:40%

通过引入杠杆率, you increased your return on equity by 4 times. The key reason behind the increase in the return on equity was because of the benefits of debt.

Because debt is considered an expense, earnings spent on debt repayments are not taxed.

这是one of the greatest benefits of debt: tax shields. The formula for a company's tax shield from debt is simply the interest expense multiplied by the corporate tax rate. In this scenario it would be $900k * 33% = $300k.

这是also evidenced by the tax expenses being reduced from $500k to $200k.

尽管杠杆似乎似乎是一个好主意，但大多数公司不主要由债务筹集资金的原因。事实是，债务确实给公司的现金流量施加了压力，尽管它可以放大公司的回报，但在糟糕的情况下，它也会放大其损失。

如果目标的EBIT在两种情况下都跌至60万美元，那么ROE会发生什么？

Famous LBO transactions

在这里，您会看到许多人会听到的一些著名的LBO交易。但是，请注意，其中大多数是公开可用的信息，您可以在线了解有关LBO Transactions的更多信息。

希尔顿酒店公司

Blackstone acquired Hilton in 2007 for ~$26 billion. Before the acquisition, Hilton was trading on the public markets, and Blackstone decided to take it private.

The acquisition was financed by $20.5 billion (78.5%) in debt and $5.6 billion in equity. At the time, Blackstonepurchased all common stockat an estimated 40% premium.

This LBO was generally deemed a success, and the company IPOed again in 2013. However, by the time Blackstone sold all of its stake in Hilton in 2018, they realized about $14 billion in equity value. That's almost 3 times the equity they had initially put up to acquire Hilton.

戴尔技术

Silver Lake伴侣接受DellTechnologies private in 2013 for ~$25 billion. Roughly 70% of the LBO was financed using debt made瑞士信贷可用,RBC,Barclays,Bank of America, and Merill Lynch.

The deal was successfully executed despite resistance from some shareholders, including famous activist投资者卡尔·伊坎（Carl Icahn）. Dell Technologies then went on to relist in the NYSE in 2018.

HJ Heinz

HJ Heinz于2013年左右被3G Capital＆Berkshire Hathaway收购，收购费用约为230亿美元。这笔交易中的债务融资已available by J.P. Morganand富国银行.

亨氏在2015年左右与卡夫（Kraft）合并，当时已经公开了。

Source:CNBC

If you look at all the LBO examples above, you might be able to notice a pattern.

Private equity firms gain 100% controlling interest in targets, manage them for a long time (over 5 years), and after all that, they cashout via IPO(but this isn't the only method).

在使用大量债务来收购目标之后，随着时间的流逝，将使用税后利息之前的收益提高来偿还债务义务。

Because the Private Equity firm put up so little equity to acquire targets in the first place, the value of that equity by the time it is sold will have appreciated by a significant amount. This results in a hefty ROE or IRR.

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要继续学习和发展您的职业，请查看这些其他有用的WSOresources:

• Retained Earnings
• 欺诈三角
• Accounts Receivable Turnover Ratio
• 边际成本公式
• 纳什平衡