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Private Equity

Lecture 9 - 10: LBO Model, EV to Equity and Exit

Comprehensive quiz covering LBO model construction, types of EBITDA, value creation strategies, the EV-to-Equity bridge, net debt and working capital adjustments, completion mechanisms (locked box vs. completion accounts), governance, and exit routes.

Question 34 of 52

Under a locked box, why is the level of diligence on the locked box balance sheet itself typically lighter, and what is the consequence?

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

It is lighter because the buyer controls the accounts after completion

B

It is lighter because the seller indemnifies the buyer against all losses

C

It is lighter because no diligence is ever required under a locked box

D

It is lighter because the balance sheet is fixed at one date, so heavier financial DD is required on all other areas, including forecast cash flow dynamics