If the returns of the acquired company do not exceed the debt financing costs or the cash flow is not sufficient to handle the high interest rates exacted by the LBO, bankruptcy could result and ...

The target of an LBO must, almost by definition, be profitable, growing, and produce a suitably large cash flow. In acquisitions jargon this is often abbreviated as EBITDA, meaning earnings before ...

Companies which generate significant free cash flow relative to their market cap are potentially targets for a leveraged buyout (LBO), because they generate cash that could be used to service debt.

Beyond this, an ideal LBO candidate should possess several key characteristics: • Stable Cash Flows: The company should generate predictable cash flows to ensure debt repayment. • Minimal Cap ...

Given the high level of free-cash flow, combined with the incredibly low valuation currently attributed to the company, (and the current low interest rate environment), an LBO of Incredimail could ...

For an LBO to work, the target company should possess ... is a long history of stable -- and preferably growing -- cash flows. The logic here is that the target company's cash flow will be used ...

What Is the Difference Between LBO and DCF Models? Leveraged buyout (LBO) and discounted cash flow (DCF) models are both used in valuing a company but are used for different purposes. LBO is ...

These flows are hybrid flows, mixing expected operating cash flows with promised debt payments under a planned debt schedule. Because of this, it is difficult to accurately estimate the appropriate ...