1	Tax shields
2	Financial distress costs
3	Flexibility
4	Management incentives (agency costs)
5	Signalling

Which of the two factors above tend to create the most value in an LBO transaction? Briefly explain your answers by discussing one or more of the three LBO cases covered in the course. Provide an example of the so-called overinvestment problem in an LBO deal and explain how this type of behavior could lead to significant financial distress costs for in an LBO transaction.