High growth firms with high reinvestment requirements often make attractive LBO targets.

Question

Quizplus · Accepted Answer

High growth firms with high reinvestment requirements require large amounts of capital to sustain their growth, making them less attractive LBO targets as they may not have the free cash flow to service the debt incurred during the buyout. LBO targets typically have stable cash flows and are able to generate enough free cash flow to service the debt used to fund the buyout.

High Growth Firms with High Reinvestment Requirements Often Make Attractive