Other things equal,which one of the following groups of stakeholders often 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 often lose value in an LBO as the acquisition is typically financed through issuing high levels of debt, which can weaken the creditworthiness of the company and increase the risk of default. This can lead to a downgrade in the bond rating and a reduction in the value of the bonds. Selling stockholders may also lose value if they sell their shares at a lower price than what they would have received without the LBO, but buying stockholders and investment bankers typically benefit from the transaction.

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