Evaluate the implications of the aggressive use of debt

Reference no: EM132844805

Case Study:

A "leveraged buyout" is when a company's own assets are used as collateral to support a loan that is then used to purchase that same company. It has been described as the company buying itself. In the 1980s, leveraged buyouts became popular as a way to extract more value for shareholders. The approach was highly successful, with several billionaires created in the process. However, this high-risk approach also has serious ethical and financial consequences. It leaves a company saddled with an enormous pile of debt. Frequently the company is stripped of its brands or dismantled to repay the debt. While shareholders and executives may benefit, creditors, suppliers, or employees are often harmed. With this assignment, you will have the opportunity to evaluate a real-life leveraged buyout of your choice, and to carefully consider the ethical and financial implications of the decisions made by executives and their advisors.

Upon successful completion of this assignment, you will be able to:

Question 1: Understand innovative approaches to the use of debt in business.

Question 2: Evaluate the implications and appropriateness of the aggressive use of debt.

Reference no: EM132844805

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