medium · Private Equity pe-core
An LBO sponsor is evaluating a target with a high revenue sensitivity to GDP (revenue beta of 1.5×). The base case assumes 2% GDP growth.
If a recession occurs and GDP contracts by 2%, how much of a revenue decline should the sponsor model based on this sensitivity?
- 3.0%
- 1.5%
- 4.0%
- 6.0%
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