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Leveraged Buyouts

Andrew Stolz

The LBO ratios can go to 90% of debt and 10% of equity. A private equity firm aims a target return of around 20 – 25% (WallStreetMojo, 2018). The concept of an LBO transaction is simple – private equity buys a company, fixes it up, repays its debt and then sells the company for a higher price to earn the profit.

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M&A Terms Every Business Owner Should Know

Class VI Partner

Common Equity Common Equity (sometimes also referred to as Common Stock) reflects the value of a company’s assets minus its liabilities minus any Preferred Equity that would have preference over the Common Equity. It is typically the highest risk/highest potential return portion of a company’s capital structure.

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M&A Valuation Methods: Your Essential Guide with 7 Key Methods

Valutico

Analysts use financial metrics and multiples such as Price to Earnings (P/E), Price to Book (P/B), Enterprise Value to Sales (EV/Sales), Enterprise Value to EBITDA (EV/EBITDA), and Price to Book (P/B) ratios derived from trading data of similar public companies or deal pricing data of similar M&A transactions.