If a company were looking for capital by way of a private placement, where ald it look for funds? Funds for private placement can be found through insurance companies, pension funds, mutual funds, and wealthy individuals 15-11 How does a leveraged buyout work? What does the debt structure of the firm normally look like after a leveraged buyout? What might be done to reduce the The use of a leveraged buy-out implies that either management or some other investor group borrows the needed cash to repurchase all the shares of the company. After the repurchase, the company exits with a lot of debt and heavy To reduce the debt load be sold off to ge cash. Also, returns from asset sales may be redeployed into higher return areas 15-12 How might a leveraged buyout eventually lead to high returns for companies? Companies may restructure their companies and once again take them public at a fit 15-13. What is privatization? In the international markets, investment bankers take companies private that were previously owned by the government CopyrightC 2005 by The McGray-Hill Companies, Inc. -526Copyright © 2005 by The McGraw-Hill Companies, Inc. S-526 15-10. If a company were looking for capital by way of a private placement, where would it look for funds? Funds for private placement can be found through insurance companies, pension funds, mutual funds, and wealthy individuals. 15-11. How does a leveraged buyout work? What does the debt structure of the firm normally look like after a leveraged buyout? What might be done to reduce the debt? The use of a leveraged buy-out implies that either management or some other investor group borrows the needed cash to repurchase all the shares of the company. After the repurchase, the company exits with a lot of debt and heavy interest expense. To reduce the debt load, assets may be sold off to generate cash. Also, returns from asset sales may be redeployed into higher return areas. 15-12. How might a leveraged buyout eventually lead to high returns for companies? Companies may restructure their companies and once again take them public at a large profit. 15-13. What is privatization? In the international markets, investment bankers take companies private that were previously owned by the government