The dire need for acquisition financing
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by Imad Ghandour June 1, 2007

written by Imad Ghandour June 1, 2007

Private equity in the region is like a limbering man: almostall acquisitions of this $20 billion industry are beingfinanced directly from the coffers of the private equityfunds. It is the good, old way of investing, but somethingthat has been abandoned a long time ago in other parts ofthe world. What is missing from the private equity secret potion is thepower of leveraging: using less expensive debt to financeacquisitions instead of using the more expensive equity.Take an example: Suppose a company is acquired for $100million by equity only (ie all the $100 million came fromthe private equity fund) and is sold at $130 million in oneyear, then the IRR is 30%. However, if the same investmentis financed by $50 million bank loan at 10% interest rate,than the remaining $50 million invested directly from thefund own pocket will be returned as $75 million aftersettling the loan and the interest of $5 million,

Imad Ghandour

Imad is the Co-founder and Managing Director of CedarBridge, an investment company focusing on high-growth opportunities in education, healthcare, wellness & beauty, and retail in Europe and MENA. With over 15 years of experience in private equity across MENA, the UK, and China, he serves on several boards, including SAE Arabia and The Grooming Company. He has also served as a director for major organizations like CIRA, Maarif Education, and Metito. Imad co-founded the MENA Private Equity Association, is a member of the British Venture Capital Association, and holds an Engineering degree from the American University of Beirut and an MBA from the University of Wisconsin – Madison.

The dire need for acquisition financingENAR

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The dire need for acquisition financing
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