Will leveraged buyouts (LBO) be next?
So far the financial crisis has centered around mortgages and mortgage backed assets. As the current historical crisis unfolds and gobbles up respected Wall Street investment banks - here is a question to ponder. Will private equity companies be next? Specifically, I mean firms who have more of leveraged buyouts on their books.
While I am yet to research the LBOs in the US in detail, I think there will be a number of firms (e.g.: Ontario Teachers) who have used debt as a source of capital for private equity buyouts. When debt becoming taboo, I wonder when will we see the contagion spread to this market!
