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sir if the senior management of okazu is able to get 5m shares for $5m, why is MBO team forced to proved $55m for same quantity of shares?
They are not paying $55M for their 5m shares – they are only paying $5m for their 5m (50%) equity stake.
The other $50m is loans to the company and is long-term debt of the company.
sir but it is clearly stated that: “Dofu Co has agreed to provide leveraged finance for a 50% equity stake in the new company on the following basis”
It seems that LBO is not any different from any normal loan provider providing debt to the company, but just having that option to provide finance in the form of equity also, apart from providing debt.
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