Lbo - Study guides, Class notes & Summaries
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LBO Exam with Complete Questions and Answers 2024.
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LBO Exam with Complete Questions and Answers 2024.
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LBO Interview Questions With 100% Correct Answers!!
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LBO Interview Questions With 100% Correct Answers!!
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LBO Questions and Answers (Graded A)
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LBO Questions and Answers (Graded A) 
Walk me through a basic LBO model. - ANSWER ️️ "In an LBO Model, Step 1 is 
making assumptions about the Purchase Price, Debt/Equity ratio, Interest Rate on Debt 
and other variables; you might also assume something about the company's operations, 
such as Revenue Growth or Margins, depending on how much information you have. 
Step 2 is to create a Sources & Uses section, which shows how you finance the 
transaction and what you use the capital for; th...
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LBO Model Quiz Advanced 2024
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LBO Model Quiz Advanced 
All of the following types of debt are typically "floating-rate" instruments used to finance 
an LBO EXCEPT: 
a. Subordinated Notes 
b. Term Loan A 
c. Term Loan B 
d. Revolver 
e. None of the above - ANSWER ️️ Explanation: The correct answer choice is A. All of 
the answer 
choices listed above with the exception of A are floating-rate debt instruments, meaning 
that its interest rate is not fixed (e.g. 8% each year until maturity) but rather tied to 
something li...
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LBO Model Quiz Basic-Answered
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LBO Model Quiz Basic-Answered 
Which of the following statements below are TRUE regarding why an LBO works 
conceptually? 
a. By using debt, the PE firm reduces up-front cash required, thereby boosting returns 
b. Using cash flows produced by the company to pay down debt and make interest 
payments produces a better return for the PE firm than simply keeping the cash flows 
c. Since the PE firm sells the entire company in the future, it's guaranteed to at least get 
back 100% of its original ca...
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LBO Theory & Modeling Exam Review 2024/2025
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LBO Theory & Modeling Exam Review 2024/2025 
Leveraged Buyout (LBO) (4) - Answer-1. Acquisition of a public or private company with a significant 
amount DEBT 
- Debt 60 - 75% of purchase price 
2. LBO model is an analysis that projects returns of a potential investment by making assumptions on 
valuation, forecasted financials, and deal structure 
3. Project out 3 -statements to determine how much cash used to PAY DOWN outstanding debt during 
ownership 
4. Return (IRR / MoC) determined by.....
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LBO/PE Interview Prep Exam Questions & Answers
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LBO/PE Interview Prep Exam Questions & Answers 
Hurdle rate - ANSWER ️️ minimum acceptable rate of return 
Run me through the changes between the existing balance sheet and the pro forma 
balance sheet in an LBO model. (8 steps) - ANSWER ️️ 1) Deduct cash used in 
transaction 
2) PP&E Step-up 
3)New Identified Tangibles 
4) New Goodwill 
5) Capitalized financing fees 
6) New debt+repayment of old debt 
7) Deferred tax liability 
8) New common equity 
Walk me through an LBO analysis - ANS...
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LBO'S EXAM QUESTIONS AND ANSWERS
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What is an LBO and why does it work? 
An LBO is when a PE firm uses a mix of debt and equity to buy a company; operates it for several years, and then sells the company at the end of the period to realize returns on its investment. 
 
During the period of ownership the PE firm uses the company's cash flows to pay for the interest expense on the debt and to repay debt principal. 
 
It works because the leverage amplifies returns: If the deal performs well the PE fir will realize higher returns t...
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LBO Model Guide Questions and Answers
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LBO Model Guide Questions and Answers 
Does reducing the amount of cash you pay upfront increase or decrease your returns? 
Why? - ANSWER ️️ Increase; money today is worth more than money tomorrow 
Basic explanation of what a PE firm does - ANSWER ️️ It buys a company using 
some combination of debt and equity and then sell it in 3-5 years for a return. The firm 
uses the company's cash flows to pay off interest and debt principal 
The 3 key reasons that an LBO works - ANSWER ️️ 1. ...
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Leveraged Buyouts and LBO Models Exam Questions and Answers
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Leveraged Buyouts and LBO Models Exam 
Questions and Answers 
What is a leveraged buyout and why does it work? - ANSWER ️️ In a leveraged 
buyout (LBO), a private equity firm acquiresd a company using a combination of debt 
and equity, operaites it for several years, and then sells the company at the end of the 
periof to realize a return on its investment. 
During the period of ownership, the PE firm uses the company's cash flows to pay for 
the interest expense on the debt and to repay th...
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