Leveraged buyouts are basically ponzi schemes designed to use recurring revenue to pay back debtors, rather than the usual scheduled lump sum payout down the road.
They were tweaked to work on a different time scale.
The idea they can get some distance to avoid scrutiny.
In a lot of cases, the debtors are also the owners of the firm that initiated the leveraged buyout. They load the target up with debt, can't make the payments, and then they collect as debtors.
See Sears and their current CEO for exactly that model. It's been going on in retail for years. They're all getting boned hard though thanks to Amazon gutting brick-n-mortar retail. OOPS.
Of course the real people being screwed are the folks on main street.
They were tweaked to work on a different time scale.
The idea they can get some distance to avoid scrutiny.
In a lot of cases, the debtors are also the owners of the firm that initiated the leveraged buyout. They load the target up with debt, can't make the payments, and then they collect as debtors.
See Sears and their current CEO for exactly that model. It's been going on in retail for years. They're all getting boned hard though thanks to Amazon gutting brick-n-mortar retail. OOPS.
Of course the real people being screwed are the folks on main street.