# Leveraged buy-out risks

- Canonical URL: https://www.gerhardmerk.de/leveraged-buy-out-risks
- Post ID: 593052
- Modified: 2023-07-25T21:01:16+00:00
- Language: en

## Definition

In connection with leveraged buy-outs, there are three types of risks that a bank has to bear. - The credit risk due to the financing or the commitment as underwriter; - the absence of fees and thus a loss for the - very cost-intensive and requiring experts in various fields, specialists from different professional disciplines - planning and preparation of a leveraged buyout; and - the holding risks from the equity investment for the bank's own account. This risk situation prompts banks to include covenants of various kinds from the outset and to use all possibilities of risk transfer. - See Buying Centre, Legal Opinion. - Cf. ECB Monthly Bulletin, August 2007, pp. 102 (list of risks; individual covenants in footnotes), ECB Monthly Bulletin, November 2007, pp. 26 ff. (decline in LBO activity and its causes; overviews). Attention: The financial encyclopedia is protected by copyright and may only be used for private purposes without express consent! University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec. Professor Dr. Eckehard Krah, Dipl.rer.pol. E-mail address: info@ekrah.com https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk https://www.jung-stilling-gesellschaft.de/merk/ https://www.gerhardmerk.de/

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