Educate me on Leveraged Buyouts..

[SSpiro]

Trying to find my path to my first venture with goals of it leading to many many more..

After doing some preliminary reading, it seems like this may be a good way to get started. (see this thread: Want to start management company..) )

Seems almost too simple of a concept that I'm concerned i may be missing something. Anyone have any good links or insight on how this works out, in perhaps the world of buying/selling restaurants?

[rogercbryan]

It's only simple until you have to find someone to put up the money or take a great deal of risk on your behalf..

[SSpiro]

It's only simple until you have to find someone to put up the money or take a great deal of risk on your behalf..

Cant the LBO be configured as such that the business being bought would take out the loan itself, vs me taking out the loan personally?

I'd think an existing business that has a track record of profit and sales shouldn't/wouldn't have an issue coming up with a buyout figure that is able to be financed from a normal loan institution?

The way I see this working.. and I'll put this down so that I can be corrected if I don't understand properly..

1. I find company that is for sale, that I wish to buy.
2. I offer to purchase company by means of LBO.
3. Company hires me as management or director staff.
4. Company to be purchased obtains loan to buyout current owner.
5. Current owner is bought out, and then resigns or retires.
6. Company appoints me as new owner/director. Company made private again.
7. Company sells majority of stock to me at nominal fee.

Am I understand procedure correctly? I have more to read on this, and in the middle of doing so. Still have tons of questions, like how does the "company" decide on what to sell the company share at to me, what does an institution look at within the company to approve a loan for buyout, etc?

[rogercbryan]

Cant the LBO be configured as such that the business being bought would take out the loan itself, vs me taking out the loan personally?

I'd think an existing business that has a track record of profit and sales shouldn't/wouldn't have an issue coming up with a buyout figure that is able to be financed from a normal loan institution?

The way I see this working.. and I'll put this down so that I can be corrected if I don't understand properly..

1. I find company that is for sale, that I wish to buy.
2. I offer to purchase company by means of LBO.
3. Company hires me as management or director staff.
4. Company to be purchased obtains loan to buyout current owner.
5. Current owner is bought out, and then resigns or retires.
6. Company appoints me as new owner/director.
7. Company sells majority of stock to me at nominal fee.

Am I understand procedure correctly? I have more to read on this, and in the middle of doing so. Still have tons of questions, like how does the "company" decide on what to sell the company share at to me, what does an institution look at within the company to approve a loan for buyout, etc?

lol.. over my head again.... there are a few people on here that can answer this much better then I can.

[RLorenzen]

Here is some info about LBOs, but maybe you read this already.
Leveraged buyout - Wikipedia, the free encyclopedia

[SSpiro]

Here is some info about LBOs, but maybe you read this already.
Leveraged buyout - Wikipedia, the free encyclopedia

I sure have. Some good info, just trying to apply the reading to my personal example or plans.

[SSpiro]

Anyone else?