What is a Leveraged Buy-Out Firm?

it is a vulture firm that has little or no money of its own, and pledges the assets of the company it acquires as collateral for a loan to buy it. thus after the sale, the company has a huge debt load and unless it is extremely profitable it may not be able to even make the interest payments on the debt. This is ok with the new owner as it will spin-off what is worthwhile making some money on selling that and leaving the rest to collapse in bankruptcy. sweet deal for the vulture as it makes money and risks nothing, sweet deal for the previous owners because they can cash out. the only losers are the workers that no longer have a job, health insurance or a retirement.

leveraged buy-out has no relation to job outsourcing. that happens when a vulture firm, usually acting as a management consultant and not a buyer, moves work production out of the firm. this is usually done so as to eliminate union wages and employee pensions. the outsourcing, to be most effective usually goes to mexico or asia to drive down employee expense even more. the vulture then collects a share of the savings of the terminated jobs as payment for its 'service'.

the polite term for this is venture capitalist. Venture capitalists are good when they put up their own money to finance start-up businesses that are not sufficiently established to be publicly traded. In this case, if successful, the IPO provides the return on investment to the venture capitalist and the company goes its own way as a public corporation. This kind of venture is risky, unlike leveraged buy-outs and outsourcing which are guaranteed money makers for the vulture.

KKR & Co. L.P. (in the past prevalent as Kohlberg Kravis Roberts & Co.) (NYSE: KKR) is an American multinational deepest fairness organization, focusing on leveraged buyouts, located in long island. The organization sponsors and manages deepest fairness investment money. provided that its inception, the organization has executed over $4 hundred billion of deepest fairness transactions and became a pioneer interior the leveraged buyout industry.[3][4] The organization became based in 1976 by Jerome Kohlberg, Jr., and cousins Henry Kravis and George R. Roberts, all of whom had earlier worked jointly at undergo Stearns, the place they executed the extremely some earliest leveraged buyout transactions. provided that its founding, KKR has executed countless landmark transactions alongside with the 1989 leveraged buyout of RJR Nabisco, which became the biggest buyout in background to that factor, besides because of the fact the 2007 buyout of TXU, this is at present the biggest buyout executed as much as now.[5][6] KKR has executed investments in over one hundred sixty companies provided that 1977, finishing up a minimum of one investment in each 365 days different than 1982 and 1990.[7]

Well they are firms that have a lot of leverage,and they do buy outs,and they do it firm,and they get firmer when they go outsourcing.

borrow huge sums of money from banker friends

buy out a company

strip the assets and fire all the people

profit