Читать книгу Leveraged Buyouts - David Pilger - Страница 10

One of the beauties of equity investing is that you can only lose what you put in. The same truth applies with most leveraged buyouts. One of the main advantages for investors is the limited losses that accompany buying a company mainly with debt secured by the assets of that same company. You can substitute the word ‘debt’ in this case with ‘Other People’s Money’.

When an investor is required to commit just 10% of the capital required to purchase a company, it is significantly less than that of the 100% pure equity investor. The potential losses and therefore risk of the pure equity investor are far greater than those of the LBO equity investor. The levered investor has much less capital at risk should the acquired company not succeed. In the case of failure (or bankruptcy), the levered equity investor would almost certainly lose their entire investment, but that would most likely pale in comparison to the total losses realized by a 100% equity investor.

“One of the main advantages for investors is the limited losses that accompany buying a company mainly with debt secured by the assets of that same company.”