The LBO market may be headed for trouble, with some companies faring well and others failing completely. That's the forecast from Wilbur Ross Jr., chairman and CEO of WL Ross & Co.
LBOs, or leveraged buyouts, occur when a financial sponsor uses borrowed money, such as bonds or loans, to acquire controlling interest in a target company. Ross agreed with a report in Wednesday's Wall Street Journal that indicated the LBO deals helping to drive the markets today dwarf the buyout frenzy of the 1980s. Ross says the situation is troubling.