easy · Investment Banking
An LBO 'Waterfall' refers to:
- The standard method that analysts use to calculate the terminal value figure within a DCF model.
- The way that projected cost and revenue synergies flow from the Income Statement into the Balance Sheet.
- The multi-step process investment firms use to raise committed equity capital from a group of limited partners.
- The sequence in which excess cash flow is used to repay different tranches of debt based on seniority.
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