The 1980s were a different time. Michael Milken and the firm he founded, Drexel Burnham, created the High Yield industry. Milken’s high yield debt financings enabled companies to access capital that prior to Milken would have had zero chance of raising capital. If memory serves, Milken’s shop would often finance LBOs where the acquiring firm could finance a deal without any equity, simply raising capital against the target company’s EBITDA. This predated PE as we know it, which took off in the 2007 period and accelerated in 2009 as interest rates fell to zero under Bernanke. For the past couple of years many PE transactions have been 100% financed by equity.
In addition, Greenmail was legal in the 1980s and popularized by Carl Icahn.
The 1980s were a different time. Michael Milken and the firm he founded, Drexel Burnham, created the High Yield industry. Milken’s high yield debt financings enabled companies to access capital that prior to Milken would have had zero chance of raising capital. If memory serves, Milken’s shop would often finance LBOs where the acquiring firm could finance a deal without any equity, simply raising capital against the target company’s EBITDA. This predated PE as we know it, which took off in the 2007 period and accelerated in 2009 as interest rates fell to zero under Bernanke. For the past couple of years many PE transactions have been 100% financed by equity.
In addition, Greenmail was legal in the 1980s and popularized by Carl Icahn.