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Which characteristic makes a company a good LBO candidate?

  1. A Stable predictable cash flows and low existing leverage
  2. B High growth with negative cash flow
  3. C Heavy capital expenditure requirements
  4. D Cyclical earnings
Answer

Stable predictable cash flows and low existing leverage

Debt service requires reliable cash generation, so volatile or capital-hungry businesses are poor candidates regardless of growth.

All Investment Banking MCQs

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