LBO MODELING COURSE EXAM QUESTIONS AND
ANSWERS WITH COMPLETE SOLUTIONS VERIFIED
give examples of sources
sponsor equity, debt, money from the company's balance sheet, management rollover,
revolver,
give some examples of uses
transaction fees, financing fees, purchasing equity, refinancing debt
Why do pe firms keep stock on company's balance sheet after purchase and how
much do they usually keep?
3-20% and they do this becuase they can give it to management for hitting targets and
recruting new talent to the firm
How to determine how much debt can be added to a compnay in an LBO?
interest coverage ratio: ebitda/interest payment
leverage ratio: debt/equity
how steady and recurring the cash flows are
what are levered loans? Who gives them out? what kind of interest rate do they
have?
they are loans given out by banks to compnaies that already have a lot of debt on them
with floating interest rates
explain pro rata
ANSWERS WITH COMPLETE SOLUTIONS VERIFIED
give examples of sources
sponsor equity, debt, money from the company's balance sheet, management rollover,
revolver,
give some examples of uses
transaction fees, financing fees, purchasing equity, refinancing debt
Why do pe firms keep stock on company's balance sheet after purchase and how
much do they usually keep?
3-20% and they do this becuase they can give it to management for hitting targets and
recruting new talent to the firm
How to determine how much debt can be added to a compnay in an LBO?
interest coverage ratio: ebitda/interest payment
leverage ratio: debt/equity
how steady and recurring the cash flows are
what are levered loans? Who gives them out? what kind of interest rate do they
have?
they are loans given out by banks to compnaies that already have a lot of debt on them
with floating interest rates
explain pro rata
