Corporate Leveraged Buyout Market Development Trends

Abstract :

The article is devoted to the peculiarities of international financing transactions on large corporate private equity acquisitions, including M&A deals using borrowed funds. The main emphasis is made on the study of the international leveraged buyout market and the requirements for the values of debt to EBITDA ratios.

We made some conclusions concerning the term of loan within the LBO: in the USA and most EU countries the buyer can expect a loan of up to five years, while in Russia it is possible to attract borrowed funds for two or three years. The problems of performing LBO transactions by Russian companies today connected to limited number of banks that are willing to take on non-traditional risks. However, LBO has great prospects in Russia, as knowledge of transactions spreads, and banks become more active in dealing with them, gaining experience, there will be an understanding of the structure of transactions. Gradually, investors will begin to offer more interesting conditions that can contribute to the growth of interest in these mechanisms in a business environment.

In the article there were also investigated the results of multiple regression analysis bases on US statistics. A model with three factors, making impact on LBO deals number was built. These factors: industrial PMI, GDP, and bankruptcy of individuals. In the result we found, that business activity index for manufacturing companies and the level of bankruptcy of individuals have the greatest impact on the number of LBO.