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Technical Note on LBO Valuation (A): LBO Structure and the Target IRR Method of Valuation

By: Carliss Y. Baldwin
  • Format:Print
  • | Pages:10
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Abstract

Explains the equity cash flow method of valuation as it applies to leveraged buyouts. Also explains: 1) earnings and cash flow forecasts, 2) debt structure and the cash sweep, 3) the cashing out horizon and terminal valuation, and 4) the target IRR method of valuation.

Keywords

Valuation; Leveraged Buyouts; Capital Budgeting; Borrowing and Debt; Cash Flow; Equity; Profit; Price; Forecasting and Prediction

Citation

Baldwin, Carliss Y. "Technical Note on LBO Valuation (A): LBO Structure and the Target IRR Method of Valuation." Harvard Business School Technical Note 902-004, July 2001.

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