Efficient use of leverage in buyouts: An application in the Greek corporate market

Abstract

The paper aims at defining the framework within which a Leveraged Buyout (LBO) could potentially take place. The theory behind this particular type of buyout has been actually formulated through time since both country specific legal conditions and global business environment have suffered significant changes. The theoretical part of the paper concentrates on specific issues ranging from the valuation of a legal entity, which will participate in such a buyout, to the financial structure of the entities involved in an LBO. The paper proceeds with the research for the business case. Aim of the research is to identify Greek corporations, which could potentially fulfill the quantitative and qualitative conditions set throughout this paper. The research output will serve so as to demonstrate, on the basis of the theory presented, a realistic application of a management buyout transaction. The business case could supply managers with valuable information, such as financial structuring models and taxation related issues, focused on MBO transactions. The significance of the aforementioned issues sheds light to an unexplored territory for the Greek corporate environment taking under consideration that no major leveraged buyout deals have taken place until the early 21st century.