Was Toys R Us A Good Investment For Lbo?
Was Toys R Us a good Investment for LBO?
In general, when you are placing a bet knowing that the risk is high as a skyrocket, you tend to carefully select your best bet, with this in mind picking an exceptional candidate for a highly leveraged transaction is no exception. Jensen (1989) describe LBO capital structure as a highly levered transaction where the acquirer uses a fraction of its equity while employing a considerable portion of debt financing. Consequently, a favorable target is undeniably required to be a mature entity where the stock price was traded at a lower end, has a strong capability of generating sufficient cash flow to meet its debt repayment on a timely basis.
Such ideal firm has a tendency to have a capable management
In general, when you are placing a bet knowing that the risk is high as a skyrocket, you tend to carefully select your best bet, with this in mind picking an exceptional candidate for a highly leveraged transaction is no exception. Jensen (1989) describe LBO capital structure as a highly levered transaction where the acquirer uses a fraction of its equity while employing a considerable portion of debt financing. Consequently, a favorable target is undeniably required to be a mature entity where the stock price was traded at a lower end, has a strong capability of generating sufficient cash flow to meet its debt repayment on a timely basis.
Such ideal firm has a tendency to have a capable management