hard · Private Equity pe-core

In a 'Management Buyout' (MBO) scenario, what is the primary structural benefit that reduces the risk for the private equity sponsor?

1. Management's deep operational knowledge reduces information asymmetry during due diligence.
2. The structure eliminates any need for equity contribution from the sponsor firm
3. MBOs automatically qualify for lower fixed interest rates from senior secured bank lenders
4. The MBO structure allows the company to completely avoid all transaction, legal, and advisory fees

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