easy · Investment Banking ma-lbo

In an LBO, which of the following scenarios would most likely increase the Internal Rate of Return (IRR) for the sponsor, assuming all other factors remain constant?

  1. A decrease in the amount of debt used to fund the acquisition.
  2. An increase in the initial equity contribution by the sponsor.
  3. An increase in the exit multiple compared to the entry multiple.
  4. A longer holding period before exit.

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