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Re: Changes on the High Street
And not forgetting, if it's a US company doing the LBO (even of a UK company), there's a huge tax benefit.
Quote:
Leveraged Buyout Tax Benefit
Leveraged buyouts create tax shields that, under the United States tax code, allow companies to deduct interest paid on debt as an expense, unlike dividends paid to equity shareholders, which cannot be expensed. For instance, a company that faces a large tax burden can benefit from increased debt financing because the interest is accounted for as an expense, which is tax deductible. Therefore, increasing interest expense results in a significantly lower tax obligation owed to the IRS.
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