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A leveraged buyout fund is evaluating Siena Company relative to its peer companies. Siena is most likely a good candidate for a management buy-in if it has:

A higher cash flow and less capable managers than its peers.

In a management buy-in, a leveraged buyout (LBO) fund replaces the existing managers of a portfolio company with a new team it believes can increase the value of the company. Companies with high cash flow are attractive candidates for LBOs because their cash flow can help service the debt issued to finance the LBO. A company with high cash flow and capable managers is a potential candidate for a management buyout (MBO), a transaction in which the managers participate and stay on after the company goes private.


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