medium · Investment Banking ma-lbo
If an LBO exit is achieved via a 'Dividend Recapitalization,' how are the returns generally affected?
- The IRR increases because capital is returned to the sponsor earlier.
- The MOIC increases because more debt is used in this deal.
- The IRR increases while the MOIC simultaneously decreases in tandem.
- The deal becomes significantly less risky overall for the lenders financing it.
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