LBO investors will often use the target firm's cash in excess of normal working capital requirements to finance the transaction.

Question

Quizplus · Accepted Answer

This is true. LBO investors will often use extra cash on hand in order to reduce the amount of debt financing needed for the transaction. This can also lower the risk for the investors, as they are not relying solely on debt to finance the purchase.

LBO Investors Will Often Use the Target Firm's Cash in Excess