How do you use structured finance in order to finance buyouts?
Structured finance is the use of various layers of debt and equity to attain the number needed to effectuate the buyout. The assets of the target are used to collateralize a prime layer of debt, a layer of equity is required to make the deal and there is often a layer of debentures, sometimes at the level of junk bonds, based on the presumed ability of the cash flow of the target to pay off.
