Michael Robert Milken is an American financier and philanthropist. He is noted for his role in the development of the market for high-yield bonds, and his conviction and sentence following a guilty plea on felony charges for violating U.S. securities laws. Since his release from prison, he has also become known for his charitable giving. Milken was pardoned by President Donald Trump on February 18, 2020.
In finance, a high-yield bond is a bond that is rated below investment grade. These bonds have a higher risk of default or other adverse credit events, but offer higher yields than better quality bonds in order to make them attractive to investors.
In business, a corporate raid is the process of buying a large stake in a corporation and then using shareholder voting rights to require the company to undertake novel measures designed to increase the share value, generally in opposition to the desires and practices of the corporation's current management. The measures might include replacing top executives, downsizing operations, or liquidating the company.
A leveraged buyout (LBO) is one company's acquisition of another company using a significant amount of borrowed money to meet the cost of acquisition. The assets of the company being acquired are often used as collateral for the loans, along with the assets of the acquiring company. The use of debt, which normally has a lower cost of capital than equity, serves to reduce the overall cost of financing the acquisition. The cost of debt is lower because interest payments often reduce corporate income tax liability, whereas dividend payments normally do not. This reduced cost of financing allows greater gains to accrue to the equity, and, as a result, the debt serves as a lever to increase the returns to the equity.
Private equity (PE) typically refers to investment funds, generally organized as limited partnerships, that buy and restructure companies that are not publicly traded.
Asset stripping is a term used to refer to the practice of selling off a company's assets in order to improve returns for equity investors. In many cases where the term is used, a financial investor, referred to as a 'corporate raider', takes control of another company and then auctions off the acquired company's assets. The term is generally used in a pejorative sense as such activity is not considered helpful to the company.
In corporate finance, a leveraged recapitalization is a change of the company's capital structure, usually substitution of equity for debt
Drexel Burnham Lambert was an American investment bank that was forced into bankruptcy in February 1990 due to its involvement in illegal activities in the junk bond market, driven by senior executive Michael Milken. At its height, it was a Bulge Bracket bank, as the fifth-largest investment bank in the United States. After Drexel's collapse, Kurt Eichenwald of the New York Times noted that the bank "fueled many of the biggest corporate takeovers of the 1980's."
J.P. Morgan & Co. was a commercial and investment banking institution founded by J. P. Morgan in 1871. The company was a predecessor of three of the largest banking institutions in the world — JPMorgan Chase, Morgan Stanley, and Deutsche Bank — and was involved in the formation of Drexel Burnham Lambert. The company is sometimes referred to as the "House of Morgan" or simply "Morgan".
A private equity fund is a collective investment scheme used for making investments in various equity securities according to one of the investment strategies associated with private equity. Private equity funds are typically limited partnerships with a fixed term of 10 years. At inception, institutional investors make an unfunded commitment to the limited partnership, which is then drawn over the term of the fund. From the investors' point of view, funds can be traditional or asymmetric.
Apollo Global Management, Inc., is a global alternative investment manager firm. It was founded in 1990 by Leon Black, Josh Harris, and Marc Rowan. Apollo is headquartered in New York City, with additional offices across North America, Europe and Asia. The company's stock is publicly traded on the NYSE under the symbol 'APO'.
The history of private equity and venture capital and the development of these asset classes has occurred through a series of boom-and-bust cycles since the middle of the 20th century. Within the broader private equity industry, two distinct sub-industries, leveraged buyouts and venture capital experienced growth along parallel, although interrelated tracks.
Private equity in the 1980s relates to one of the major periods in the history of private equity and venture capital. Within the broader private equity industry, two distinct sub-industries, leveraged buyouts and venture capital experienced growth along parallel although interrelated tracks.
Private equity in the 1990s relates to one of the major periods in the history of private equity and venture capital. Within the broader private equity industry, two distinct sub-industries, leveraged buyouts and venture capital, experienced growth along parallel although interrelated tracks.
Private equity in the 2000s represents one of the major growth periods in the history of private equity and venture capital. Within the broader private equity industry, two distinct sub-industries, leveraged buyouts and venture capital expanded along parallel and interrelated tracks.
Crescent Capital Group is a global alternative investment firm focused on below investment grade credit markets with primary strategies that include funds that invest in leveraged loans, high-yield bonds, mezzanine debt, special situations, and distressed securities. The firm has approximately $28 billion of assets under management and has made investments in over 190 companies since its inception as well as expanded into the European market with operations based in London.
Trimaran Capital Partners is a middle-market private equity firm formerly affiliated with CIBC World Markets. Trimaran is headquartered in New York City and founded by former investment bankers from Drexel Burnham Lambert. Trimaran's predecessors were early investors in telecom and Internet businesses, most notably backing Global Crossing in 1997. Trimaran also led the first leveraged buyout of an integrated electric utility.
The Predators' Ball: The Inside Story of Drexel Burnham and the Rise of the Junk Bond Raiders, by Wall Street Journal writer Connie Bruck, largely recounts the rise of Michael Milken, his firm Drexel Burnham Lambert, and the leveraged buyout boom they helped to fuel in the 1980s.
Entrepreneurial finance is the study of value and resource allocation, applied to new ventures. It addresses key questions which challenge all entrepreneurs: how much money can and should be raised; when should it be raised and from whom; what is a reasonable valuation of the startup; and how should funding contracts and exit decisions be structured.
The corporate debt bubble is the large increase in corporate bonds, excluding that of financial institutions, following the financial crisis of 2007–08. Global corporate debt rose from 84% of gross world product in 2009 to 92% in 2019, or about $72 trillion. In the world's eight largest economies—the United States, China, Japan, the United Kingdom, France, Spain, Italy, and Germany—total corporate debt was about $51 trillion in 2019, compared to $34 trillion in 2009. Excluding debt held by financial institutions—which trade debt as mortgages, student loans, and other instruments—the debt owed by non-financial companies in early March 2020 was $13 trillion worldwide, of which about $9.6 trillion was in the U.S.
