How does having no existing debt on an LBO target$$s closing balance sheet impact the returns to the financial buyer?

A$)$It significantly increases the returns due to the absence of prior financial obligations that need to be cleared, allowing for a greater allocation of funds towards growth investments.

B$)$It decreases the returns as the company would not have experience managing debt, posing a risk to efficient capital structure management post$-$acquisition.

C$)$It has no direct impact on the returns to the financial sponsor since the pre$-$acquisition capital structure is replaced and returns are primarily driven by the equity contribution and the cash inflows throughout the holding period.

D$)$It makes the investment less attractive since existing debt can provide tax shields that would be absent in a debt$-$free company, directly reducing potential returns.