LBOs

Question 1

What makes for a good LBO candidate?

Answer 1

1) stable cash flows

2) Be undervalued relative to peers

3) Be a low-risk business

4) Low CapEx costs

Question 2

What increases the IRR in an LBO?

Answer 2

1) Lower purchase price

2) Less Equity

3) Higher EBITDA Margins

4) Lower Interest Rates

5) Lower CapEx

*essentially ask if it increases cash flow

Question 3

What is a dividend recapitalization?

Answer 3

The PE firm forces the company to take on additional debt and issues itself a big cash dividend