medium · Investment Banking
In a sell-side M&A context, what does the 'LBO Floor' represent on a valuation football field?
- The lowest price the stock has traded at over the trailing 52-week period
- The minimum liquidation value realized from selling off the company's hard tangible assets
- The maximum price a financial sponsor can pay while still achieving its target IRR.
- The price level at which the company's dividend yield equals its blended after-tax cost of debt
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