FEDS Paper: Pre-LBO Credit Market Conditions and Post-LBO Target Behavior
Seung Kwak and Charles PressIn the context of leveraged buyouts (LBOs), this paper empirically studies the relation between pre-buyout credit market conditions and the post-buyout behavior of target companies, employing a supervisory dataset to overcome limited data availability for post-buyout target financial information. We propose an LBO-specific measure of (changes of) credit market conditions--the short-term (6-month) change of credit spreads leading up to buyout close.