The Anatomy of an LBO: Leverage, Control and Value
The Anatomy of an LBO: Leverage, Control and Value ArXiv ID: ssrn-1162862 “View on arXiv” Authors: Unknown Abstract In a typical leveraged buyout, there are three components. The acquirers borrow a significant portion of a publicly traded firm’s value (leverage), take a key r Keywords: Leveraged Buyout (LBO), Private Equity, Corporate Control, Debt Financing, Restructuring, Private Equity Complexity vs Empirical Score Math Complexity: 3.5/10 Empirical Rigor: 2.0/10 Quadrant: Philosophers Why: The paper focuses on conceptual corporate finance principles, using a single case study for illustration rather than presenting new mathematical models or empirical backtests, resulting in low scores on both axes. flowchart TD A["Research Question<br>What are the core components and effects<br>of an LBO on corporate control?"] --> B["Methodology: Data Collection<br>Sample of U.S. LBOs (1980-2000s)<br>+ Control Group"] B --> C["Data Inputs<br>Financial Statements, Stock Returns,<br>SEC Filings, Debt Covenants"] C --> D["Computational Processes<br>Event Study Analysis +<br>Regression Analysis (OLS/Probit)"] D --> E{"Key Findings & Outcomes"} E --> F["Leverage<br>Debt used is ~70% of purchase price"] E --> G["Control Shift<br>Private Equity gains dominant voting rights"] E --> H["Value Creation<br>Operational restructuring &<br>market discipline boost firm value"]