6. LBOs Flashcards
1
Q
Cash Flow Available Formula
A
CFA = NI + Dep - CAPX - Delta NWC + Deffered Tax + Other non-cash expenses + Other cashflows not in NI
1
Q
Why would you carry out a LBO ?
A
RATIONALE 1: GOOD DEAL
- You view the target’s stock as underpriced
- You view interest rates as too low and debt-finance the deal
RATIONALE 2: VALUE CREATION
Improve Operating Efficiency
