easy · Private Credit market-sourcing-sponsor-dynamics
How does 'Multiple Expansion' contribute to returns in a leveraged buyout (LBO)?
- Selling the company at a higher valuation multiple (e.g., 10x EBITDA) than the entry multiple (e.g., 8x EBITDA).
- Expanding the company's product line into several new geographic regions and international export markets.
- Increasing the number of distinct debt tranches, such as first-lien and second-lien tranches, used in the structure.
- Reducing the annual management fee percentage that the General Partner charges its investors on committed capital.
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