LBO Debt-Capacity Deck
Recall the cash-flow checks used to size debt in an LBO.
mixed-card-deck comparison What is the first question before accepting a leverage quote? Can recurring cash flow service the debt after capex, working capital, taxes, and interest? The lender quote is an input; debt capacity is a conclusion. Recall Debt / EBITDA versus free-cash-flow coverage Use both, but let cash coverage govern the final recommendation. Compare Partner says: "Use the full debt quote; it helps returns." Pre-IC leverage discussion. Your line We should use only the debt the base and downside cash bridges can carry without underfunding capex or working capital. Do not debate only the IRR uplift. It accepts return…
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