Management buyout - Samenvattingen, Aantekeningen en Examens

PSI: LIFE, ACCIDENT, AND HEALTH PRACTICE EXAM ALREADY PASSED Under the misstatement of age or gender provision, what happens if it is determined at death that the insured's age or gender was misstated on a life insurance policy application? Benefits are adjusted to an amount that the premium would have purchased at the correct age or gender. Which of the following must be given to the insurer within 20 days after occurrence or commencement of any loss covered by the policy, or as thereafter a...

What are characteristics of a good candidate for an LBO? Steady Cash flows Limited Business Risk Low CAPEX / Working Capital Strong Management Opportunity for Cost Reduction High asset base value Low R&D Steady industry What are some way to increase the IRR of an LBO? Reduce the purchase Price Increase Debt Increase the exit multiple Increase the company's growth rate Cut more costs Dividend recap Leverage Reduce Capex and Working Capital Why is leverage used by private equity firms when buyi...

BIWS LBO Exam Questions With 100% Correct Answers What is a leveraged buyout, and why does it work? - answer- PE firm acquires a company using a combination of debt and equity - it operates it for several years - then sells the company at the end of the period to realize a return on its investment - during the ownership period, the PE firm uses the company's cash flows to pay for the debt interest expense and to repay the debt principal IT WORKS BECAUSE - leverage amplifies returns ...

Insurance - Answer-transfer of risk by contract to insurers who agree to indemnify insureds for losses Risk - Answer-chance of loss pure risk - Answer-only outcomes are loss or no loss personal risk - Answer-premature death, insufficient income, poor health, unemployment property risk - Answer-loss of real property or personal property (on the land not the land itself) Liability risk - Answer-something that results in loss to another (3rd party buyout) Controlling risk - Answer-risk manage...

What is a leveraged buyout, and why does it work? - ANSWER "In a leveraged buyout (LBO), a private equity firm acquires a company using a combination of Debt and Equity, operates it for several years, and then sells the company at the end of the period to realize a return on its investment. It works because leverage amplifies returns: If the deal performs well, the PE firm will realize higher returns than if it had bought the company with 100% Equity. But leverage also presents risks because i...

Objectives are specific, often quantified, versions of goals. True or False? - Answer: True Goals are verifiable and specific, and are developed so that management can measure performance. True or False? - Answer: False Creditors and suppliers typically share the same goals for the organization. True or False? - Answer: False Social responsibility refers to an individual's responsibility to make business decisions that are legal, honest, moral, and fair. True or False? - Answer...

20-bagger - indicates a company that appreciates in value 20-fold compared to the cost of the venture capital investment. angel investing - refers to the earliest stage of venture capital, in which investors fund the first cash needs of an entrepreneurial idea. auction process - involves bidding among several private equity firms, with the deal going to the highest bidder. buy-and-build strategy - refers to the buying of a platform company with a well-developed managemen...

Why do PE firms use leverage when buying companies? Amplify returns using leverage Less capital upfront => greater upside potential + greater risk Walk me through a basic LBO model 1. Make assumptions about purchase price, funding sources, interest rate on debt, and growth 2. S&U to back into Equity Contribution. PPA to calculate GW and Other Intangibles created 3. Adjust target's B/S for new debt and equity figures, allocate the purchase price, and add GW and other Intangibles s.t. A = L +...

LBO Characteristics - ANSWER Potential targets have predictable cash flows and substantial assets. 60% to 70% debt vs. 30% to 40% from financial sponsors (equity contribution). Sponsors have sought a 20% annual return and an "exit" within five years. Growing in the past three decades due to the proliferation of junk bond market and the private investment vehicles. Key Participants - ANSWER Financial Sponsors Investment Banks Capital Providers Target MGMT Financial Sponsors...

CEPA Analysis Exam Questions & Answers 2024/2025 Based on the 2013 EPI State of Owner Readiness Survey, how many business owners were not familiar with all their transition options? - ANSWERSNearly 2/3rds What is a pro for an intergenerational transfer? - ANSWERSa) Business legacy preservation b) Planned c) Lower cost Which of the following is not an inside exit option? - ANSWERSRecapitalization What are the two general categories for private ownership exit options? - ANSWERSInside...