2 ms·
For an LBO they don't need to be paid 10x. If I borrow 900K to buy a million dollar business, I have only 100K invested in it. Let's say 2 years later I sell
by mathattack 11y ago
For an LBO they don't need to be paid 10x.
If I borrow 900K to buy a million dollar business, I have only 100K invested in it. Let's say 2 years later I sell the business for 2 million... After paying back the 900K and perhaps 100k in interest I am left with 10x (1 million) of my 100k equity.
Of course if the debt kills the company, we all lose.