IB Interview Questions: LBO : Level 3 LBO Questions

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1. What is the least preferred exit method in PE?

The least common exit option is an IPO because of the time needed (often 6+ months from filing) and because the PE firm is often prevented from selling for 6 months post-IPO.

With that said, PE firms do sometimes take companies public to exit, especially if public company valuations are very attractive.

2. What is an ‘effective’ multiple as opposed to an ‘optical’ multiple?

An optical multiple shows the purchase price of a business relative to the stated profit (typically EBITDA) at the time of the acquisition.

In contrast, to calculate an effective multiple, we look at purchase price relative to profit (again typically EBITDA) incorporating improvements in the business.


IB Interview Questions: M&A : Level 1 M&A Questions

IB Interview Questions: M&A : Level 2 M&A Questions

IB Interview Questions: M&A : Level 3 M&A Questions

IB Interview Questions: LBO : Level 1 LBO Questions

IB Interview Questions: LBO : Level 2 LBO Questions



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