An LBO can be valued from the perspective of which of the following?
A) Equity investors
B) Lenders
C) All those supplying funds to finance the transaction
D) A and B only
E) A, B, and C

Question

Quizplus · Accepted Answer

An LBO can be valued from the perspective of equity investors, lenders, and all those supplying funds to finance the transaction. Each group has a different interest and expectation in the success or failure of the transaction and therefore will value it differently. Equity investors will be interested in the potential return on their investment, lenders will be interested in the ability of the borrower to make timely payments, and all those funding the transaction will be interested in the potential risks and rewards of the LBO. Therefore, considering all three perspectives is important for a comprehensive valuation of an LBO.

An LBO Can Be Valued from the Perspective of Which