Editing Leveraged buyout (section)

===Origins===
{{Main|Early history of private equity}}
The first leveraged buyout may have been the purchase by [[Malcom McLean|McLean Industries, Inc.]] of [[Pan-Atlantic Steamship Company]] in January 1955 and [[Waterman Steamship Corporation]] in May 1955.<ref>On January 21, 1955, McLean Industries, Inc. purchased the capital stock of Pan Atlantic Steamship Corporation and Gulf Florida Terminal Company, Inc. from Waterman Steamship Corporation. In May McLean Industries, Inc. completed the acquisition of the common stock of Waterman Steamship Corporation from its founders and other stockholders.</ref> Under the terms of that transaction, McLean borrowed $42 million and raised an additional $7 million through an issue of [[preferred stock]]. When the deal closed, $20 million of Waterman cash and assets were used to retire $20 million of the loan debt.<ref>Marc Levinson, ''[[The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger]]'', pp. 44–47 (Princeton Univ. Press 2006). The details of this transaction are set out in ICC Case No. MC-F-5976, ''McLean Trucking Company and Pan-Atlantic American Steamship Corporation – Investigation of Control'', July 8, 1957.</ref>

Lewis Cullman's acquisition of [[Orkin|Orkin Exterminating Company]] in 1964 is among the first significant leveraged buyout transactions.<ref>{{Cite news |last=Madoff |first=Ray D. |date=June 16, 2019 |title=Opinion &#124; The Case for Giving Money Away Now |url=https://www.wsj.com/articles/the-case-for-giving-money-away-now-11560714097 |archive-url=https://web.archive.org/web/20230909023344/https://www.wsj.com/articles/the-case-for-giving-money-away-now-11560714097 |archive-date=2023-09-09 |website=Wall Street Journal |via=www.wsj.com}}</ref><ref>{{Cite web |url=http://www.orkin.net/history/purchase |title=Archived copy |access-date=2020-08-28 |archive-date=2020-08-04 |archive-url=https://web.archive.org/web/20200804032421/http://www.orkin.net/history/purchase |url-status=dead }}</ref><ref>{{Cite web |last=Sullivan |first=Carl |date=January 11, 2005 |title=THE PHILANTHROPIST DISCUSSES TSUNAMI RELIEF, PUBLIC VERSUS PRIVATE GIVING, AND WHY PARENTS SHOULD LIMIT THEIR CHILDREN'S INHERITANCE |url=https://www.newsweek.com/philanthropist-discusses-tsunami-relief-public-versus-private-giving-and-why-parents-should-limit |archive-url=https://web.archive.org/web/20231118123152/https://www.newsweek.com/philanthropist-discusses-tsunami-relief-public-versus-private-giving-and-why-parents-should-limit |archive-date=2023-11-18 |website=Newsweek}}</ref><ref>{{Cite web |last=A |first=A |title=Lewis B. Cullman '41 &#124; Obituaries &#124; Yale Alumni Magazine |url=https://yalealumnimagazine.com/obituaries/4913-lewis-b-cullman-41 |archive-url=https://web.archive.org/web/20240811223852/https://www.yalealumnimagazine.com/obituaries/4913-lewis-b-cullman-41 |archive-date=2024-08-11 |website=yalealumnimagazine.com}}</ref> Similar to the approach employed in the McLean transaction, the use of [[publicly traded]] holding companies as investment vehicles to acquire portfolios of investments in corporate assets was a relatively new trend in the 1960s, popularized by the likes of [[Warren Buffett]] ([[Berkshire Hathaway]]) and [[Victor Posner]] ([[Triarc|DWG Corporation]]), and later adopted by [[Nelson Peltz]] ([[Triarc]]), [[Saul Steinberg (business)|Saul Steinberg]] (Reliance Insurance) and [[Gerry Schwartz]] ([[Onex Corporation]]). These investment vehicles would utilize a number of the same tactics and target the same type of companies as more traditional leveraged buyouts and in many ways could be considered a forerunner of the later private-equity firms. In fact, it is Posner who is often credited with coining the term "leveraged buyout" or "LBO."<ref>{{cite web|last=Trehan|first=Robin|url=http://www.4hoteliers.com/4hots_fshw.php?mwi=1757|title=The History Of Leveraged Buyouts|website=4Hoteliers|date=December 4, 2006|access-date=2008-05-22}}</ref>

The leveraged buyout boom of the 1980s was conceived in the 1960s by a number of corporate financiers, most notably [[Jerome Kohlberg, Jr.]] and later his protégé [[Henry Kravis]]. Working for [[Bear Stearns]] at the time, Kohlberg and Kravis, along with Kravis' cousin [[George R. Roberts|George Roberts]], began a series of what they described as "bootstrap" investments. Many of the target companies lacked a viable or attractive exit for their founders, as they were too small to be taken public and the founders were reluctant to sell out to competitors: thus, a sale to an outside buyer might prove attractive.  In the following years, the three [[Bear Stearns]] bankers would complete a series of buyouts including Stern Metals (1965), Incom (a division of Rockwood International, 1971), Cobblers Industries (1971), and Boren Clay (1973) as well as Thompson Wire, Eagle Motors and Barrows through their investment in Stern Metals.<ref>Burrough, Bryan. ''[[Barbarians at the Gate]].'' New York : Harper & Row, 1990, pp. 133–136</ref> By 1976, tensions had built up between Bear Stearns and Kohlberg, Kravis and Roberts leading to their departure and the formation of [[Kohlberg Kravis Roberts]] in that year.