 Going private and leveraged by out transactions are commonly seen under merger deals. Going private is a situation that refers to the conversion of a publicly trading company into a privately owned company and this is done by the company's management which may purchase its shares and gets its shares delisted from the stock exchange. The shareholders of this company are forcefully given cash. Such deals are often leveraged by outs. Now leveraged by outs is a situation in which the acquiring of a firm is in which acquisition of a firm is done by using a large amount of debt in the part payment of the total assets value of that particular firm and the remaining amount of debt assets value is generally contributed by a small group of investors in the form of equity. In leveraged by outs, a premium above the market price is paid to the shareholders of the firm who are selling their firm. This type of transaction becomes profitable for the acquirer only if there is some synergy exceeding the premium. Now although synergy involves the participation of two firms but in leveraged by outs, there is only one firm so the concept of synergy to explain is little difficult having one firm participating in leveraged by out transaction. Let's see the reasons behind value creation by leveraged by outs. The first reason is there is a tax shield on more debt that raises the firm's value. Also there is the concept of improved efficiency under the carrot and stick approach. For carrot, it is the ownership under leveraged by outs deals which induces managers to work more harder and stick refers to the fear of becoming unprofitable after leveraged by outs due to the very high amount of interest payments with the usage of larger amount of debt. In that situation the new firm must be kept running either through the increase in the revenue or the cost reductions. Now there is a famous theory that is agency theory which identifies managers induced to misuse the larger pre cash flows for their personal benefits. One solution to curb this situation is to use interest payments by deploying the higher amount of debt so it is the leverage that curbs this particular situation. What is easy to measure the additional tax shield but it is harder to measure the gain of better efficiency in such type of leveraged by outs. Academic research reports some value creation by leveraged by outs. There is a positive premium that implies benefit for the selling stockholders. Leveraged by outs when going public, they generate high returns for the management group. Leveraged by outs increase operating performance. Besides these value creation opportunities there are some limitations of this value creation claim. First limitation is that there is a difficulty in obtaining data about leverage by outs that do not go public. The higher amount of leverage poses higher risk to the firm under leveraged by out.