Mergers and Acquisitions Final Exam Questions and Correct Answers
1 vue 0 fois vendu
Cours
M&A Modeling
Établissement
M&A Modeling
Leveraged Buyouts A leveraged buyout (LBO) is the acquisition of a company, division, business, or collection of assets ("target") using debt to finance a large portion of the purchase price. The remaining portion of the purchase price is funded with an equity contribution by a financial sponsor ("...
Mergers and Acquisitions Final Exam
Questions and Correct Answers
Leveraged Buyouts ✅A leveraged buyout (LBO) is the acquisition of a company,
division, business, or collection of assets ("target") using debt to finance a large portion
of the purchase price. The remaining portion of the purchase price is funded with an
equity contribution by a financial sponsor ("sponsor").
Financial Sponsor ✅A financial sponsor is a private equity investment firm, particularly
a private equity firm that engages in leveraged buyout transactions. They usually look
for a 20%+ annualized return and an exit period of five years.
Private Equity Firm ✅An investment management company that provides financial
backing and makes investments in the private equity of startup or operating companies
through a variety of loosely affiliated investment strategies including leveraged buyout,
venture capital, and growth capital. PE firms, hedge funds, and venture capital funds
raise the vast majority of their investment capital from third-party investors, which
include public and corporate pension funds, insurance companies, endowments and
foundations, sovereign wealth funds, and wealthy families/individuals.
Amount of debt ✅In a traditional leverage buy-out, debt as typically comprised 60% to
70% of the financing structure with equity comprising the remaining 30% to 40%.
Tax savings ✅The use of leverage provides the additional benefit of tax savings
realized due to the tax deductibility of interest expense.
Free cash flow ✅Free cash flow is the cash a company produces through its
operations, less the cost of expenditures on assets. In other words, free cash flow (FCF)
is the cash left over after a company pays for its operating expenses and capital
expenditures, also known as CAPEX. Used to service periodic interest payments and
reduce the principal amount of debt over the life of the investment.
Investment horizon ✅During the time from which the sponsor acquires the target until
its exit, cash flow is used primarily to service and repay the principal amount of debt,
thereby increasing the equity portion of the capital structure.
Debt used in leverage buyouts ✅The debt used in an LBO is raised through the
issuance of various types of loans, securities, and other instruments that are classified
based on their security status as well as their seniority in the capital structure. The
condition of the prevailing debt capital markets plays a key role in determining leverage
levels, as well as the cost of financing and key terms. The equity portion of the financing
structure is usually sourced from a pool of capital ("fund") managed by the sponsor.
Les avantages d'acheter des résumés chez Stuvia:
Qualité garantie par les avis des clients
Les clients de Stuvia ont évalués plus de 700 000 résumés. C'est comme ça que vous savez que vous achetez les meilleurs documents.
L’achat facile et rapide
Vous pouvez payer rapidement avec iDeal, carte de crédit ou Stuvia-crédit pour les résumés. Il n'y a pas d'adhésion nécessaire.
Focus sur l’essentiel
Vos camarades écrivent eux-mêmes les notes d’étude, c’est pourquoi les documents sont toujours fiables et à jour. Cela garantit que vous arrivez rapidement au coeur du matériel.
Foire aux questions
Qu'est-ce que j'obtiens en achetant ce document ?
Vous obtenez un PDF, disponible immédiatement après votre achat. Le document acheté est accessible à tout moment, n'importe où et indéfiniment via votre profil.
Garantie de remboursement : comment ça marche ?
Notre garantie de satisfaction garantit que vous trouverez toujours un document d'étude qui vous convient. Vous remplissez un formulaire et notre équipe du service client s'occupe du reste.
Auprès de qui est-ce que j'achète ce résumé ?
Stuvia est une place de marché. Alors, vous n'achetez donc pas ce document chez nous, mais auprès du vendeur twishfrancis. Stuvia facilite les paiements au vendeur.
Est-ce que j'aurai un abonnement?
Non, vous n'achetez ce résumé que pour €8,79. Vous n'êtes lié à rien après votre achat.
