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How to Finance a Leveraged Buyout

    • 1). Recruit a team of financial and legal experts to structure the LBO proposal. These financial proposals are complicated and require a team of experts with LBO experience to prepare a proposal that can withstand intense scrutiny from investors and their legal teams. Ensure that your financial team is trustworthy, since confidentiality is critical when negotiating sensitive LBO transactions. If news leaks to the press or stock market about a likely LBO, then the stock price can soar, making the purchase even more costly for investors and possibly making the deal less attractive.

    • 2). Identify prospective investors and strategic partners. Banks, insurance companies, pension funds and Wall Street firms are potential investors. Identify the correct person within these organizations for the initial presentation, before disclosing too much confidential information to anyone.

    • 3). Meet with interested lenders or investors. When meeting with interested parties to discuss the investment opportunity, be prepared with basic financial information and a team of experts capable of discussing technical transaction details related to the structure of the deal. Group meetings are best, with all key players in attendance whenever possible.

    • 4). Field questions from potential investors. Be certain to have technical backup for all answers pertaining to specific details of the agreement. Arrange for a conference call when appropriate to clarify technical issues or negotiate any proposal changes.

    • 5). Negotiate the final terms of the LBO agreement with investors. Keep all experts involved in the deal on call if they cannot make the meeting, in case any last-minute obstacles arise. Sign the legal contracts necessary to move forward with the purchase.

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