medium · Investment Banking valuation-core

In a sell-side M&A context, what does the 'LBO Floor' represent on a valuation football field?

1. The lowest price the stock has traded at over the trailing 52-week period
2. The minimum liquidation value realized from selling off the company's hard tangible assets
3. The maximum price a financial sponsor can pay while still achieving its target IRR.
4. The price level at which the company's dividend yield equals its blended after-tax cost of debt

Sign up free to see the explanation and track your rank →