One of the key attributes that makes a firm a good candidate for an LBO is that it has stable and predictable cash flows that are adequate to meet interest and principal payments on the debt.

Question

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This statement is true. In an LBO, debt is used to finance the acquisition of a company, and the debt payments are made from the cash flows generated by the company. Therefore, a company with stable and predictable cash flows is better suited for an LBO because it can comfortably make the interest and principal payments on the debt. Companies with volatile cash flows may not be able to meet the debt obligations, leading to financial distress or default.

One of the Key Attributes That Makes a Firm a Good