Losing on LBOs
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Regarding “How LBOs Work” (Oct. 21):
Thank you for the short and simple explanation of this complicated series of transactions. As I have suspected for some time, the only party hurt in this deal is the stockholder. Yes, he gets more than the then-market value of his shares of stock. But he is forced to sell--perhaps against his long-range plans--and very definitely he is at the mercy of a group of highly paid consultants, bankers, etc., who will make enormous fees from this transaction.
It would appear that there is a great incentive to the management of a public company to see to it that the company performs poorly for several years, driving the stock down and making it ripe for a leveraged buyout. Then they can step in as saviors with little or no cash investment on their part, keep their executive salaries and eventually share in the profitable disposition of the company at a later date.
Once again, it is the small shareholder left with no protection, no alternatives and less than true value for his investment.
DANIEL S. CONNELLY
Newport Beach
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