Growth LBO’s

class="textPage">This is similar to increasing value and cash flow, except that the inherent properties of the company are in good order, namely the operating efficiency is high, management is productive and output has been maximized in the current domain where the business is running. The growth LBO will take the company and expand it nationally and geography across the globe. Here the new corporation can take advantage of global demand for the product as well as economies of scale due to the greater output and negotiating alliances with smaller local companies.

class="textPage">Examples include Wendel Investissements which has teamed up with Kohlberg Kravis and Roberts as well as CVC Capital Partners to make a number of acquisitions in Chemical finishing and electrical sockets companies. Wendel is emphasizing increasing acquisitions in the US and pan Europe to double assets by 2010. The company said that they have to be able to expand to be able to increase their ability to invest.

class="textPage">Wendel's first US acquisition was the takeover for 1.04 billion USD of New York based Deutsch Group, maker of electrical connectors.
There is also a risk however. The buyout firm has to give more discretion to the current management and very often growth is achieved through acquisitions which more often than not results in a lack of success due to corporate cultural incompatibilities.