Leveraged Buyouts as Part of Mergers and Acquisitions

Abstract :

The development of world economies in recent years has been influenced by the globalization, which tends to be terminologically abused in both theory and practice. Yet, it is hard to disagree with its huge role, being aware of ?its multifaceted character. Free movement of capital, its concentration and the ongoing process of getting a faster communication, both electronic and physical, year by year are having more and more effect on shaping the world’s order. The complexity of this phenomenon may be exemplified by the correlation between the electricity demand, economic growth and environmental protection, which is in turn associated with the construction of new power plants. One of the characteristic features of the modern world, determined by the processes of globalization, is the phenomenon of acquisition of business organizations. Means of the investment is certainly the capital. Capital (in particular the cost and ease of acquisition) usually affects the design of a takeover model. The article focuses on the phenomenon which has been increasing over the lat few years, namely on the share of specific capital transactions that are financed by the debt of the acquired entity. The specificity of these acquisitions is that they are characterized by a relatively high rate of return as well as they result in a deep restructuring of the acquired business, which determines their effectiveness.