Other things equal, which one of the following groups of stakeholders should expect to lose value as a result of an LBO?
A) Selling stockholders
B) Buying stockholders
C) Pre-LBO bondholders
D)Investment bankers

Question

Quizplus · Accepted Answer

Pre-LBO bondholders are likely to lose value as a result of an LBO because the LBO typically involves taking on a significant amount of debt to finance the purchase of the company, which can increase the risk of default for bondholders. Selling stockholders may also lose value if they sell their shares for less than what they perceive to be fair market value, but this is not always the case. Buying stockholders and investment bankers typically stand to gain from an LBO if it is successful.

Other Things Equal, Which One of the Following Groups of Stakeholders