Seven private investment firms acquired 100% of the outstanding stock of SunGard Data Systems Inc. (SunGard). SunGard is a financial-software firm known for providing application and transaction software services and creating backup data systems in the event of disaster. The company’s software manages 70% of the transactions made on the NASDAQ stock exchange, but its biggest business is creating backup data systems in case a client’s main systems are disabled by a natural disaster, blackout, or terrorist attack.
Its large client base for disaster recovery and backup systems provides a substantial and predictable cash flow. Furthermore, the firm had substantial amounts of largely unencumbered current assets. The deal left SunGard with a nearly 5-to-1 debt-to-equity ratio. Why do you believe lenders might have been willing to finance such a highly leveraged transaction?
Consider the people and/or events that we have discussed this semester — whether it is through the text/lessons, in-class activities, homework, or documentaries, and choose something that interested you the most. Tell me several things that you learned, why you found your choice to be interesting, and whether or not you had heard of it prior to the semester.
May 3, 2020
8:31 pm
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