FINANCE: Leveraged Buyout Financing for Small Business

Leveraged buyout financing (LBO) is typically provided for the strategic purchase of other product lines, divisions, or companies. They can also be used for, but not limited to management buyouts, acquisitions, divestitures, valuations and refinancings.

When using leveraged buyout financing, be prepared to:
– Raise and negotiate terms of senior, subordinated, and equity financing
– Find strategic and financial partners for these transactions
– Organize business plans
– Hire needed management personnel, where applicable
– Structure new employee benefit plans
– Communicate effectively with employees
– Negotiate long-term supply and use agreements

Leveraged buyout financing usually takes the form of cash flow lending that is underwritten based on the strength and sustainability of your cash flows. Cash flow loans are another alternative to asset-based loans for companies that have predictable and historically sustainable cash flows, operating performance and enterprise value based on brand, franchise value, technology, or customer base.

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