Ask the Advisor – Q: Can I reduce my company’s leverage with an acquisition?

Description

Abstract: Companies that are highly leveraged and looking for ways to reduce debt may want to consider making an acquisition. This strategy involves buying another business and “over-equitizing” it with fresh capital. The goal is a less-leveraged combined entity — and long-term growth potential. But as this column notes, many factors must be in place for this strategy to work.