Word: cash
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Dates: during 1980-1989
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Perhaps the most attractive feature of LBOs is that they give managers a sizable chunk of equity in newly structured companies. By using borrowed money to buy out the stockholders, executives can cash in their old shares at a profit even as they become owners of their firms. The managers are then free to sell parts of the business at a handsome profit. The ultimate payoff comes when they put their companies back on the market. The sale of well-run corporations can return up to 100 times the amount of a manager's original investment. With investors lured...
Bankers, too, are taking a harder look at the risks, and some junk-bond buyers are becoming picky. While cash has poured in from such staid investors as the Harvard and Yale endowment funds and many state pension plans, other money managers are refusing to play. Says New York City comptroller Harrison Goldin, who oversees the investment of some $30 billion in pension funds: "I cannot condone activities that divert so much time and energy from investments that create new jobs and opportunities to those that reshuffle chairs. Pension-fund managers are supposed to invest in the American economy...
LBOs do have some strong defenders, and not just among the executives who grow rich from them. Some financiers and economists argue that increased leverage can be a benefit to companies, especially those in mature industries like tobacco. Reason: these businesses produce a lot of cash but call for relatively little research or development. For them, one efficient way to distribute profits to shareholders is simply by buying up stock...
Specifically, Bush has promised to increase funding for a variety of programs that serve students from preschool through college, to reward schools that raise test scores and to award cash bonuses to outstanding teachers. Now that the White House is his, TIME will take the President-elect at his word. During the next four years, the magazine will occasionally grade Bush on his progress in addressing one of the nation's most urgent problems...
...Anschutz of Denver, a billionaire oil and mining magnate. They have since combined forces with an acknowledged master of the hostile game, HARRY GRAY, 69, the taciturn former chairman of United Technologies, who heads his own investment firm. The First Boston group is offering a highly complex package of cash, securities and stock warrants, which is still only a hazy proposal rather than a firm bid. The sheer size of First Boston's bid persuaded RJR's board to give the group until Nov. 29 to make the offer more concrete. If successful, the high-rolling group would probably keep...