LBO Transaction's Impact On The Company's Share Price

The Leveraged Buyout (LBO), one of the methods of M&A, is an choice accepted by the management level, because of its intrinsic property.The intention of this essay is to find out relationship between the LBO event and share price short-time performance of acquiring company that means to find out how the acquirers’ share price performs before and after the LBO deal during the selected Event Time Window ([-25,25]50days) and provide some help for those stock investors who intent to invest the stock of the companies who are dealing the LBO activity.After using methods of Event Study and Significance Testing to analyze10LBO cases and4hostile comparative cases, a rational conclusion is obtained that the share price shows a downward trend in Time Window of LBO event. Therefore, investors are suggested to avoid involving in LBOs if their funds are available just for short term or to maintain cautious attitude to the investment especially in short time.