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Which of the following best describes a leveraged buyout fund's acquisitions? a. Investing in early stage businesses b. Investing in mid-sized businessesc. Investing in foreign businesses

Respuesta :

letmeanswer

The best describes a leveraged buyout fund's acquisitions is Investing in mid-sized businesses.

Explanation:

A leveraged buy (LBO) is a takeover of another company which is spending a substantial amount of money to offset the acquisition cost. In addition to the acquired company's assets, assets are often used as collateral for the loans.

One of the largest LBOs reported in 2006 was Kohlberg Kravis Roberts & Co. (KKR), Bain & Co., and Merrill Lynch's takeover of Hospital Corporation of America (HCA).

In leveraged buy-outs (LBOs), the ratio of debt to equity is usually 90% to 10%.

Answer:

The best describes a leveraged buyout fund's acquisitions is investing in early stage businesses.

Explanation:

A leveraged buyout is one organizations' property of different companies employing a notable amount of acquired funds to adhere to the price of acquisition. The assets of the corporation being collected are often utilized as security for the investments, along with the assets of the acquiring corporation.

Benefits of LBO investing in early stage businesses.

  • The utilization of debt, which normally has a lower cost of funds than equity, assists to reduce the entire cost of the "acquisition investment".
  • The debt load is lower because interest payments also reduce the "corporate income tax" debt, whereas "dividend payments" do not.  
  • This reduced financing cost benefits the property to help more, and as a result, the debt serves as a tool to increase the equity.
  • LBO suggests buying another corporation utilization a substantial share of the money that is lent to cover acquisition expenses.
  • Financing in "early-stage companies" better describes a purchase of LBO assets, as an LBO requirement is a profitable and expanding company.

Thus we can say, leveraged buyout fund's acquisitions in investing in early stage businesses are best.

To learn more about LBO, refer:

  • https://brainly.com/question/15875251