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Buy Out

The
Biz

Buy Out

A
pretty good take on Bavaria Yachts and their financial situation.

Bavaria
Yachtbau agreed to one of the most highly leveraged deals of the mergers
and acquisitions boom. It was among a swathe of big private-equity deals
that were completed before the credit crunch but that bankers say could
run aground if the economy continues to worsen.

Last
year, Bavaria sold 3,500 boats during a period of great economic prosperity.
Past clients include Formula One supremo Mike Gascoyne. The technical
chief of Force India — billionaire Vijay Mallya’s racing team
— arrived for last year’s Monaco grand prix in a Bavaria boat,
having sailed from Barcelona with his wife.

A
year later, the economic backdrop is much less benign, and has led to
a drop in demand for luxuries like yachts. “The \ deal is poorly
structured and has little protection if the business suffers in a recession,”
said one investor. Read the
story
.