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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 53 of 56

According to the lecture, assuming a multiple arbitrage (an exit multiple higher than the entry multiple) is:

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

Always prohibited in an LBO model

B

Plausible, but requires hard evidence and strong rationale

C

The default assumption in every model

D

A sign that the buyer is being overly conservative