How the deal get done in private equity buyouts?
- Private equity firms make an offer to buy a company, taking it private
- The company shareholders approve the deal and it closes.
- Private equity firms use short-term bridge loans from banks to pay off shareholders.
- Together private equity firms and their bankers make a plan to sell the bonds to investors to pay back the bridge loan.
- 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.