Why is it controversial to finance a buyout with the target's cash?
So I heard an associate discussing how somebody should not build in the functionality in an lbo model that would allow the buyer (PE firm) to finance the transaction with the target's cash. Why is that?
Don't you have a lot of cases where the market steps in and punishes the co for hoarding too much cash? Can somebody shine some light on this and in what cases would you see this self-financing happen, why is this so outlandish?