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Give an example of a “real-life” LBO.

The most common example is taking out a mortgage when you buy a house. Here’s how the analogy works:

• Down Payment: Investor Equity in an LBO

• Mortgage: Debt in an LBO

• Mortgage Interest Payments: Debt Interest in an LBO

• Mortgage Repayments: Debt Principal Repayments in an LBO

• Selling the House: Selling the Company / Taking It Public in an LBO 

All Investment Banking interview questions

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