Friday, May 23, 2008

Leveraged buyouts in trouble and the fiduciary responsibility of CEOs

In light of the many private-equity-funded deals that are unraveling now, and the major impact on the stock prices of the targets, how should CEOs handle investors eager for a quick stock bump via an acquisition?

What I mean is: how do they price in the risk of a deal not happening when trying to weigh the pros and cons of such a buyout? The breakup fees (assuming they can even get them) don't come close to compensating for the stock price hit, never mind the months of distractions and competitive inroads yielded while the deal goes south.

Just wondering.

, , , ,

0 comments: