ABSTRACT:

This paper is about leveraged buyouts and private equity firms. A leveraged buyout or LBO is an acquisition of a company (or division of a company) which is financed with a substantial portion of borrowed funds. In a leverage buyout, a company is acquired by a specialized investment firm using a relatively small portion of equity and a relatively large portion of outside debt financing. In a typical leverage buyout transaction, the private equity firm buys majority control of an existing or mature firm. The essence of this study therefore, is to examine how firms LBO strategies can be more effectively implemented in private equity firms. A set of objective evaluation criteria upon which decisions regarding LBOs can be made is also provided. The study recommends the increased use of LBOs in indigenous Nigerian organisations as a means of meeting future funding and expansion objectives.