2006-08-21 04:54:01 · 2 answers · asked by d1jensen 2 in Business & Finance ➔ Investing
Contact a securities attorney for details of how to do an LBO.
Presumably your reason for buying the company is that you can run it, making significant improvements to create value. Run some conservative estimates of what future cash flow could be, and discount them at a healthy rate related to the risk of the particular business, and that will give you an estimate of what the target company is worth.
Best of success.
2006-08-23 05:51:02 · answer #1 · answered by Thinker 5 · 0⤊ 0⤋
There is more than one way "to do an LBO". You can issue bonds or raise loans, but you still need to pony up at least 25% of the purchase price from equity investors.
As to valuation, it's all about the relationship between free cash flow yield and interest rate. An LBO makes sense if the free cash flow yield is substantially higher than the interest rate at which it is financed.
2006-08-21 13:07:59 · answer #2 · answered by NC 7 · 0⤊ 0⤋