Debt financing is always a gamble. And often a seductive bet.
The Financial Times’ Andrew Jack reports on the pharmaceutical company Valeant which has been on a buying spree financed by debt. For an ambitious businessman with a view, debt is the tool that makes scale feasible. And, as long as everything works out as planned, the returns are great.
But what if they don’t work out as planned? Who’s bearing that risk?
The Deal Professor, Steven Davidoff over at the New York Times takes a look at debt financing concocted the other way ‘round. Instead of used as a tool to enable acquisitions, it is offloaded as a part of a spinoff.
In these cases, it’s often much clearer who is bearing the risk.
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