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Private Equity

Lecture 7 - 8: Valuation, LBO Model, Exit

Quiz covering LBO structure and lender protection, financial covenants, the maximum leverage exercise, dividend recaps, valuation methodologies and multiples, the LBO model build and returns breakdown, and exit routes.

Question 3 of 56

Junior debt in an LBO (e.g. second lien, mezzanine, high yield bonds) is best characterised as:

Pick one: press 1-4 on your keyboard or click an option.
A

The cheapest source of capital because it ranks first for repayment

B

Always fully cash paid and never accrued

C

Having debt/equity hybrid characteristics, a higher cost than senior debt, and interest that can be cash paid or accrued

D

Pure ordinary equity contributed by the sponsor and management