Because of their high liquidity, lenders often lend up to 100% of the book value of accounts receivable pledged as collateral in leveraged buyouts.
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Accounts receivable represent an undesirable form of collateral from the lender's point of view because they are often illiquid.
Leveraged buyout firms use the unencumbered assets and operating cash flow of the target firm to finance the transaction.
The current stock price of the acquiring firm may decline in a share for share exchange due to the potential dilution in earnings per share.
The effects of synergy resulting from combining the acquirer and target firms do not affect the acquirer's ability to finance the transaction.