LEVERAGED BUYOUTSOne indication tha

LEVERAGED BUYOUTS
One indication that the people who warn against takeovers might be right is the
existence of leveraged buyouts.
In the 1960s, a big wave of takeovers in the US created conglomerates - collections of
unrelated businesses combined into a single corporate structure. It later became clear
that many of these conglomerates consisted of too many companies and not enough
synergy. After the recession of the early 1980s, there were many large companies on the
US stock market with good earnings but low stock prices. Their assets were worth more
than the companies' market value.
Such conglomerates were clearly not maximizing stockholder value. The individual
companies might have been more efficient if liberated from central management.
Consequently, raiders were able to borrow money, buy badly-managed, inefficient and
underpriced corporations, and then restructure them, split them up, and resell them at a
profit.
Conventional financial theory argues that stock markets are efficient, meaning that all
relevant information about companies is built into their share prices. Raiders in the
1980s discovered that this was quite simply untrue. Although the market could
understand data concerning companies' earnings, it was highly inefficient in valuing
assets, including land, buildings and pension funds. Asset-stripping - selling off the assets
of poorly performing or under-valued companies - proved to be highly lucrative.
Theoretically, there was little risk of making a loss with a buyout, as the debts incurred
were guaranteed by the companies' assets. The ideal targets for such buyouts were
companies with huge cash reserves that enabled the buyer to pay the interest on the
debt, or companies with successful subsidiaries that could be sold to repay the principal,
or companies in fields that are not sensitive to a recession, such as food and tobacco.
Takeovers using borrowed money are called 'leveraged buyouts' or 'LBOs'. Leverage
means having a large proportion of debt compared to equity capital. (Where a company
is bought by its existing managers, we talk of a management buyout or MBO.) Much of
the money for LBOs was provided by the American investment bank Drexel Burnham
Lambert, where Michael Millken was able to convince investors that the high returns on
debt issued by risky enterprises more than compensated for their riskiness, as the rate of
default was lower than might be expected. He created a huge and liquid market of up to
300 billion dollars for 'junk bonds'. (Millken was later arrested and charged with 98
different felonies, including a lot of insider dealing, and Drexel Burnham Lambert went
bankrupt in 1990.)
Raiders and their supporters argue that the permanent threat of takeovers is a challenge
to company managers and directors to do their jobs better, and that well-run businesses
that are not undervalued are at little risk. The threat of raids forces companies to put
capital to productive use. Fat or lazy companies that fail to do this will be taken over by
raiders who will use assets more efficiently, cut costs, and increase shareholder value. On
the other hand, the permanent threat of a takeover or a buyout is clearly a disincentive to
long-term capital investment, as a company will lose its investment if a raider tries to
break it up as soon as its share price falls below expectations.
LBOs, however, seem to be largely an American phenomenon. German and Japanese
managers and financiers, for example, seem to consider companies as places where
people work, rather than as assets to be bought and sold. Hostile takeovers and buyouts
are almost unknown in these two countries, where business tends to concentrate on
long-term goals rather than seek instant stock market profits. Workers in these
companies are considered to be at least as important as shareholders. The idea of a
Japanese manager restructuring a company, laying off a large number of workers, and
getting a huge pay rise (as frequently happens in Britain and the US), is unthinkable. Layoffs
in Japan are instead a cause for shame for which managers are expected to
apologize.

Результаты (английский) 1:

LEVERAGED BUYOUTSOne indication that the people who warn against takeovers might be right is theexistence of leveraged buyouts.In the 1960s, a big wave of takeovers in the US created conglomerates-collections ofan unrelated businesses combined into a single corporate structure. It later became clearthat many of these conglomerates consisted of too many companies and not enoughsynergy. After the recession of the early 1980s, there were many large companies on theUS stock market with good earnings but low stock prices. Their assets were worth morethan the companies ' market value.Such conglomerates were clearly not maximizing stockholder value. The individualcompanies might have been more efficient if liberated from central management.Consequently, the raiders were able to borrow money, buy out badly-managed, inefficient andunderpriced right corporations, and then restructure them, split them up and resell them at aprofit.Conventional financial theory argues that stock markets are efficient, meaning that allrelevant information about companies is built into their share prices. Raiders in thethe 1980s discovered that this was quite simply untrue. Although the market couldunderstand data concerning companies ' earnings, it was highly inefficient in valuingassets, including land, buildings and pension funds. Asset-stripping-selling off the assetsof poorly performing or under-valued companies-proved to be highly lucrative.Theoretically, there was little risk of making a loss with a accent's, as the 1.debts intowere guaranteed by the companies ' assets. The ideal targets for such buyouts werecompanies with huge cash reserves that enabled the buyer to pay the interest on thedebt, or companies with successful subsidiaries that could be sold to repay the principal,or companies in fields that are not sensitive to a recession, such as food and tobacco. Takeovers using borrowed money are the so-called ' leveraged buyouts ' LBOs ' ' or ' '. Leveragemeans having a large proportion of debt compared to equity capital. (Where a companyis bought by its existing managers, we talk of a management or accent's MBO.) Much ofthe money for ' LBOs ' was provided by the American investment bank Drexel BurnhamLambert, where Michael Millken was able to convince investors that the high returns ondebt issued by risky enterprises more than compensated for their riskiness, as the rate ofdefault was lower than might be expected. He created a huge and liquid market of up to300 billion dollars for ' junk bonds '. (Millken was later arrested and charged with 98different felonies, including a lot of insider dealing, and Drexel Burnham Lambert wentbankrupt in 1990.)Raiders and their supporters argue that the permanent threat of takeovers is a challengeto company managers and directors to do their jobs better, and that well-run businessesthat are not undervalued are at little risk. The threat of raids forces companies to putcapital to productive use. FAT or lazy companies that fail to do this will be taken over byRaiders who will use assets more efficiently, cut costs, and increase shareholder value. Onthe other hand, the permanent threat of a takeover or a accent's is clearly a disincentive tolong-term capital investment, as a company will lose its investment if a raider tries tobreak it up as soon as its share price falls below expectations.' Lbos ', however, seem to be largely an American phenomenon. German and Japanesemanagers and financiers, for example, seem to consider companies as places wherepeople work, rather than as assets to be bought and sold. Hostile takeovers and buyoutsare almost unknown in these two countries, where business tends to concentrate onlong-term goals rather than seek instant stock market profits. Workers in thesecompanies are considered to be at least as important as shareholders. The idea of aJapanese manager restructuring a company, laying off a large number of workers, andgetting a huge pay rise (as frequently happens in Britain and the US), is unthinkable. Layoffsin Japan are instead a cause for shame for which managers are expected toapologize.

Результаты (английский) 3:

LEVERAGED BUYOUTSone indication that the people who warn against takeovers might be right is theexistence of leveraged buyouts.in the 1960s, a big wave of takeovers in the us created conglomerates - collections ofunrelated businesses combined into a single corporate structure. it later became clearthat many of these conglomerates colonies of too many companies and not enoughsynergy. after the recession of the early 1980s, there were many large companies on theus stock market with good earnings and low stock prices. the assets were worth morethan the companies" market value.such conglomerates were clearly not maximizing stockholder value. the individualcompanies might have been more efficient if liberated from central management.at first ridiculed, raiders were able to borrow money, buy had managed, inefficient andunderpriced corporations, and then restructure) split them up, and resell them at aprofit.conventional financial theory argues that stock markets are efficient, meaning that allrelevant information about companies is built into their share prices. the raiders in the1980s discovered that this was a simply untrue. although the market couldother data concerning companies" earnings, it was highly inefficient in valuingassets, including land, buildings, and pension funds. asset - stripping is seen off the assetsof poorly performing or under valued companies - was to be highly 2 young professionals looking for.Theoretically, there was the risk of making a loss with a buyout, as the debts incurredwere guaranteed by the companies" assets. the ideal targets for such buyouts.companies with huge cash reserves that enabled the buyer to pay the interest on thedebt, or companies with successful business that could be sold to repay the principal.or companies in fields that are not sensitive to a recession, such as food and tobacco.Takeovers using borrowed money are called "leveraged buyouts" or" LBOs". Leveragemeans having a large a of debt compared to equity capital. (where a companyis close by its existing managers, we talk of a management buyout or MBO.) much ofthe money for LBOs was provided by the american investment bank Drexel burnhamLambert, where michael Millken was able to convince investors that the high returns ondebt issued by risky enterprises more than compensated for their riskiness, as the rate ofdefault was lower than might be expected. he created a and a liquid market of up to300 billion dollars for "junk bonds. (Millken was later arrested and charged with 98different felonies, including a lot of insider dealing, and Drexel burnham Lambert wentbankrupt in 1990.)the raiders and their supporters argue that the permanent threat of takeovers is a challengeto company managers and directors to do their jobs better, and that well run businessesthat are not undervalued are at little risk. the threat of raids forces companies to putcapital to productive use. fat or lazy companies that fail to do this will be taken over byraiders who will use assets more efficiently, cut costs, and increase shareholder value. onthe other hand, the permanent threat of a takeover or a buyout is clearly a disincentive tolong term capital investment, as a company will lose its investment if a raider tries tobreak it up as soon as its share price falls below expectations.LBOs, however, seem to be largely an american first. german and japanesemanagers and financiers, for example, seem to consider companies as places wherepeople work, rather than as assets to be close and sold. hostile takeovers and buyoutsare almost unknown in these two countries, where business tends to concentrate onlong - term goals rather than seek instant stock market profits. workers in thesecompanies are considered to be at least as important as shareholders. the idea of ajapanese and restructuring a company, laying off a large number of workers, andgetting a pay rise (as frequently happens in britain and the us), is unthinkable. Layoffsin japan, is a cause for night for which managers are expected toapologize.