Leveraged loans Market and its effect on Private Equity deal structuring since 2007

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ACKNOWLEDGEMENT

I am thankful to all my teachers by providing me an opportunity for grooming me and giving me the precious time to work on dissertation. I cannot be able to complete this task without their support and courage. I have learnt a lot in this university in the guidance of such nice mentors. I am also thankful to our thesis supervisor for their guidance, encouragement, appreciation and valuable time to complete this dissertation. I would also be very thankful for them in supporting me in data gathering and provided related information. I also want to appreciate the corporation of my colleagues, university management, network administration, and librarian to facilitate me. Lastly, I am grateful to my family and friends for their support, efforts, and cooperation.

DECLARATION

I declare that the following dissertation and its entire content has been an unaided effort based on individuality and have not been submitted or published before. Furthermore, it reflects my personal opinion and takes on the topic that does not represent the opinion of the University.

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ABSTRACT

This paper shows that a vibrant and financially important for public-to-private market that has emerged in the United Kingdom (U.K), United States (U.S) and Continental Europe, since the credit crunch in the year of 2007. The paper shows later movements and explores the thought processes public-to-private transactions for buyouts. This study provides explanations behind the potential wellsprings of shareholder fortune impacts throughout the transaction period are examined: a refinement is made between expense profits, motivating force realignment; transaction costs investment funds, stakeholder seizure, takeover barriers and corporate undervaluation. This paper also attempt to identify and relate the quality drivers to the post-transaction esteem and to the term of the private status. Finally, the paper reaches certain determinations and conclusions about whether public-to-private transactions are functional and useful for corporate restructuring.

ACKNOWLEDGEMENT2

DECLARATION3

ABSTRACT4

CHAPTER 1: INTRODUCTION7

1.1. Background7

1.2. Significance of the Study9

1.3. Research Aims and Objectives9

1.4. Problem Statement9

1.5. Research Questions9

1.6. Rationale of the Study10

1.7. Limitations of Study10

CHAPTER 2: LITERATURE REVIEW12

2.1. Theoretical Background12

2.2. Literature Review13

2.2.1. Major Players in the Industry13

2.2.2. Market Background14

2.2.3. Banks Regulators tighten up the Policies regarding Leveraged Loans16

2.2.4. Merger and Acquisition (M&A) and Loans based on Recapitalization19

2.2.5. Higher Purchase Prices and More Debt19

2.2.6. The Changing Nature of the Debt Package21

2.2.7. Recent activity involving private equity24

2.2.8. Adding Further Leverage into the Structure26

2.2.9. Selling the Debt - The Need for Market Flex Provisions27

2.2.10. Legal and Practical Considerations29

2.2.11. The Use of Guarantor Coverage Tests32

2.2.12. Boom and Bust Cycles in Private Equity33

CHAPTER 3: METHODOLOGY37

3.1. Research Strategy and Rationale37

3.2. Research Instrument37

3.3. Keywords38

3.4. Data Collection38

3.5. Sampling Strategy38

3.6. Data Analysis39

3.7. Ethical Considerations39

CHAPTER 4: ANALYSIS AND DISCUSSION40

4.1. Descriptive Analysis40

CHAPTER 5: CONCLUSION AND RECOMMENDATIONS45

5.1. Conclusions45

5.2. Recommendations46

REFERENCES48

APPENDICES51

Appendix-I51

Appendix-II52



CHAPTER 1: INTRODUCTION

1.1. Background

In the summer 2007, the “credit crunch” commenced at the time of writing that has found significant impact on the financial markets and global economies including the financial institutions, banks communities, investors, private equity sponsors and investor's advisers. For many events related to the historical proportions that were occurred ...