Bridge Loans — C1

How the deal get done in private equity buyouts?

  1. Private equity firms make an offer to buy a company, taking it private
  2. The company shareholders approve the deal and it closes.
  3. Private equity firms use short-term bridge loans from banks to pay off shareholders.
  4. Together private equity firms and their bankers make a plan to sell the bonds to investors to pay back the bridge loan.
  5. Now, investors who buy these bonds are pushing back, refusing to buy bonds with features that make them riskier and benefit the private equity firm.
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