Essay
In a move reminiscent of the blockbuster buyouts of the late 1980s, seven private investment firms acquired
100 percent of the outstanding stock of SunGard Data Systems Inc. (SunGard) in late 2005. SunGard is a financial software firm known for providing application and transaction software services and creating backup data systems in the event of disaster. The company's software manages 70 percent of the transactions made on the Nasdaq stock exchange, but its biggest business is creating backup data systems in case a client's main systems are disabled by a natural disaster, blackout, or terrorist attack. Its large client base for disaster recovery and back-up systems provides a substantial and predictable cash flow. Furthermore, the firm had substantial amounts of largely unencumbered current assets. The deal left SunGard with a nearly 5 to 1 debt to equity ratio. Why do you believe lenders might have been willing to finance such a highly leveraged transaction?
Correct Answer:

Verified
The firm had substantial market share in...View Answer
Unlock this answer now
Get Access to more Verified Answers free of charge
Correct Answer:
Verified
View Answer
Unlock this answer now
Get Access to more Verified Answers free of charge
Q33: Cerberus Capital Management Acquires Chrysler Corporation<br>According to
Q34: Which of the following is generally not
Q35: A term loan usually has a maturity
Q36: Lessons from Pep Boys’ Aborted Attempt to
Q37: Accounts receivable represent an undesirable form of
Q39: LBOs normally involve public companies going private.
Q40: There is some evidence that the Sarbanes-Oxley
Q41: With their cash hoards accumulating at an
Q42: TXU Goes Private in the Largest Private
Q43: LBOs often exhibit very high financial returns