Melissa Bockhold Heather Coddington - Franklin College

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STEP TWO: Seagate exchanges existing equity stake in VERITAS for new VERITAS shares. The remaining Seagate assets are distributed to shareholders. SEAGATE SHAREHOLDERS • 109 Million VERITAS Shares • Cash Proceeds of Buyout • Cash in Excess of $765 Million SEAGATE TECHNOLOGY • 109 Million VERITAS Shares • 128 Million VERITAS Shares VERITAS SOFTWARE 16
A leveraged buyout is a concept that arose during the 1970s, and it became a very popular finance tool in the high-yield bond market of the 1980s (Andrade 8). By definition a LBO is the “acquisition of a company or division of a company with a substantial portion of borrowed funds” (Note). While every LBO is unique with respect to its specific capital structure, all LBOs use financial leverage to complete the acquisition of a target company. The equity that LBO firms invest in an acquisition comes from a fund of committed capital that has been raised from institutional investors like private equity firms, insurance companies, college endowments, and individual qualified investors. Buyout funds are typically structured as limited partnerships. The firm’s principles (management) act as the general partner, and the investors in the fund act as limited partners. The general partner makes all investment decisions regarding the fund, while the limited partners are responsible for making sure the funds are available when they are needed or requested. These funds have a few standard provisions that include a minimum commitment, an investment or commitment period, and term and diversification. Also, the LBO firm will generate revenues in one of three ways: carried interest, management fees, or co-investment (Note). Below are examples of typical capital structures for LBO transactions from 1980-1999. 17
Page 1 and 2: Seagate Technology Buyout By: Melis
Page 3 and 4: I. INTRODUCTION In 1999, Seagate Te
Page 5 and 6: 1997 1997-1998 July 1998 May 1999 J
Page 8 and 9: B. Competition Competition is the m
Page 10 and 11: to twelve months, is a new opportun
Page 12 and 13: inventories of disk drive component
Page 14 and 15: was to turn the company private sin
Page 18 and 19: 100% 90% 80% 70% 60% 50% 40% 30% 20
Page 20 and 21: the value seen in its VERITAS holdi
Page 22 and 23: For all the reasons listed above, S
Page 24 and 25: large amount of confidence in Seaga
Page 26 and 27: capital structure should have a hig
Page 28 and 29: how capable a company is to pay bac
Page 30 and 31: 1.98. Although, Seagate is much low
Page 32 and 33: The next ratio we calculated was Ne
Page 34 and 35: Seagate Averages (1981- 1999) Disk
Page 36 and 37: ii. Analysis of Historical Financia
Page 38 and 39: experience? What will their earning
Page 40 and 41: Lake and other potential investors
Page 42 and 43: CFO Kenneth Lonchar stated, “We w
Page 44 and 45: X. SILVER LAKE PARTNERS INTERVIEW M
Page 46 and 47: Copy of thank you note mailed to Al
Page 48: XII. WORKS CITED Austin, Alan. Mana

Melissa Bockhold Heather Coddington - Franklin College

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