This multi-disciplinary work written by the lawyers of the private equity group of CMS Bureau Francis Lefebvre, specialists in leveraged transmission transactions, deciphers LBOs to ensure the right decisions are made.
It describes an LBO in relation to all the parties concerned and their advisors, from setting up the takeover (choice of the legal and tax structure, negotiations, financing, association of the management, etc.) to the investor's exit, without neglecting arrangements after the acquisition and solutions when the company taken over encounters economic difficulties. The legal, tax and employee aspects of the LBO are considered. The international dimension is not omitted (foreign investor or foreign target).
The LBO is a very delicate and complex financial transaction to set up. It can be risky. In order to anticipate difficulties and find answers to all the questions, this second edition, updated on 15 April 2013, contains new information particularly with regard to tax matters: general limitation in deducting financial charges, introduction of a contribution on distributed revenue, lowering of the upper limit of deficits, exit from the LBO: change in the regulations for the taxation of capital gains and arrangement of the regime of stock options and free share allocations, etc.
In thirty years, the LBO market has matured and its players have mastered the structuring of these arrangements. We note a maturing of exchanges between funds and managers: with the crisis and difficult experiences, managers have shown themselves to be more reasonable on future prospects: the business plans presented are less aggressive, hopes of gains lower, and the wider circles of managers are now interested in the gains in value of the company.
This development makes the term "LBO" unsuited to these transactions that represent more than a simple leverage effect and become a real tool for "capital transmission" – a description promoted by the AFIC for these transactions.
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