The Use of High Risk Corporate Bonds in Mergers and Corporate Takeovers

Author

Jon Kevin Lostutter, Fontbonne College

Year of Award

1996

Degree

Master of Business Administration (MBA)

College

College of Business & Professional Studies

Degree Program

Master of Business Administration

Department

Business Administration

Keywords

merger, junk bonds, investments

Abstract

The focus, of this research paper is to explore the utilization of junk bonds in corporate mergers and acquisitions. Topics are presented initially in a historical context delivering necessary background information in order to help facilitate an understanding of what actually occurred during the 1980’s, and more importantly why. Highlights include a biography of junk bond financier Michael Milken and depiction of how Milken and his company Drexel Burnham Lambert mastered the junk bond market. Next, several important deals that symbolize the significance of financing a corporate merger or acquisition through junk bonds are depicted, along with other noteworthy deals. Also, the project illustrates the challenges that many corporations as well as individual investors faced after a junk bond merger or acquisition. Finally, there are conclusions and summations from the author. A major premise of the paper is that through learning comes understanding that high risk corporate bonds did not cause the recession of the early 1990’s and that men like Michael Milken and Henry Kravis are not Satan incarnate. Instead, the project attempts to shed some light on the many positive, and in some instances necessary aspects of utilizing junk bonds. Alternately, the paper illustrates why the frenzy for junk bonds came about, what did go wrong, how future executives can learn from the mistakes made, and when high risk corporate bonds will make a comeback in the early twenty-first century.

Document Type

Restricted Thesis

Recommended Citation

Lostutter, Jon Kevin, "The Use of High Risk Corporate Bonds in Mergers and Corporate Takeovers" (1996). All Theses, Dissertations, and Capstone Projects. 177.
https://griffinshare.fontbonne.edu/all-etds/177