The leveraged buyout (LBO) is a type of management buyout (MBO), going private or other acquisition in which the acquirer obtains financing using the assets or future cash flow of the target company as collateral. Depending on the transaction, LBO financing may take various forms, including one or a combination of senior or mezzanine loans, subordinated bonds or preferred shares. An LBO transaction entails particular complexity in relation to the conflicting interests and motives of the parties involved.

There are a number of corporate and securities laws that must be considered in the context of an LBO transaction. A corporate client that intends to finance an acquisition by borrowing funds from financial institutions is required to structure the acquisition so that its borrowings can be made with minimum stress. Clients that are the financial institutions in these transactions are required to perform a creditworthiness test of the proposed structure based on the relevant corporate and securities laws, which are frequently revised.

Mori Hamada & Matsumoto has extensive experience in providing legal support through all stages of an LBO transaction, from advising on structuring and relevant corporate and securities law issues at the early stage of the transaction, to drafting and negotiating transaction documentation on both the acquisition and financing side, including loan and collateral agreements.