What makes a company a good LBO candidate for a Buyout PE fund?

The priority of a buyout fund which borrows significant amount of debt is to service the debt, i.e. both the interest and the principal promised to be paid back annually. A good LBO candidate has the following characteristics:


a. Strong and sustainable cash flows


b. Significant amount of fixed tangible assets to offer as security versus the debt borrowed.


c. Market leading position (giving it stability)


d. Preferably a strong management at the helm. Even though this is not a deal breaker as a new management can always be parachuted but adds risk to the business model.


e. Some non-core assets which can be sold quickly to reduce leverage.


f. As with all investment - a low valuation at entry.


We have an 88% placement rate for our 4 to 8 weeks training programs conducted in 2017/18 with students going on to secure jobs at marquee investment banks such as Goldman Sachs, Credit Suisse, Morgan Stanley, Citi Bank and Deutsche Bank among others. Please send your CV to info@cityinvestmenttraining.com to check your eligibility for the course.

27 views

© City Investment Training 2020

  • YouTube - White Circle
  • Instagram - White Circle
  • White LinkedIn Icon