Question
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,
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 capital d. The PE firm sells the company in the future, which allows it to get back (at least some of) the funds that it used to acquire the company in the first place.
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