AP: Buyouts Often Shortchange Shareholders

AP Business: Buyouts Often Shortchange Shareholders:

So far in 2006, there have been a record $58 billion worth of buyouts, excluding debt, that were initiated or led by management, according to market data tracker Dealogic. That tops the $9.5 billion seen last year, and is more than double 2004 levels.

Such deals generally involve companies where executives own a majority of stock and control voting power. ... In many cases, they then hook up with outside investors who help secure their financing.

Fueling this trend is Wall Street's desire to finance the billions of dollars of additional debt taken on in leveraged buyouts. In addition, managers like the idea of going private because it allows them to make investment decisions without the pressure of meeting quarterly earnings expectations, and it can rid them of some of the mounting regulatory costs.

... With such deals, it may take time for the ultimate winners to emerge. Investors could be getting paid a best-case scenario with a buyout, especially if they turn down the deal and the stock tanks in the months ahead. Or they could be leaving money on the table should they sell, and then watch the management-owners flip the company back to the public markets or sell it off for a higher price.