Comment on Leveraged buyouts are not like mortgagesparentComments−devilbunny2yBanks that loan to PE firms get paid back. Those that loan to PE-controlled firms may not.−sanswork2yAnd why would banks keep giving loans to PE-controlled firms if the likelihood is high of no repayment? They're going to know the firm is PE controlled going into the deal.−devilbunny2yAsk a bank.−sanswork2yThe answer is that your beliefs on how PE works/what they do is wrong.−devilbunny2yBut you won’t bother me with the correct answer.−gruez2yThose that loan to PE-controlled firms may not.Who are these firms? Why would they be extending massive amounts of unsecured credit to those PE bought-out firms?
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Banks that loan to PE firms get paid back. Those that loan to PE-controlled firms may not.
And why would banks keep giving loans to PE-controlled firms if the likelihood is high of no repayment? They're going to know the firm is PE controlled going into the deal.
Ask a bank.
The answer is that your beliefs on how PE works/what they do is wrong.
But you won’t bother me with the correct answer.
Who are these firms? Why would they be extending massive amounts of unsecured credit to those PE bought-out firms?