IB Technicals 6: LBOs and Market Questions

LBOs come last because they need everything before them, and the paper LBO is the question that proves it. An LBO is buying a rental property with a huge mortgage. Minimal equity down, the tenant's rent services the debt, sell the building later. Once that clicks, the mechanics follow: how much debt a business can carry, what a sponsor is, the three levers of return, and the lookup table that turns a multiple of money into an IRR. Two times in five years is about fifteen percent. Three times is about twenty-five. Then we do a paper LBO out loud, the way you would in the room. The last block of the series is the payoff. Where markets are right now, pitch me a stock, and tell me about a deal you have been following. One structure for each, and how a company, a deal, and a trend become one answer. What we'll cover: - What an LBO is, who the sponsor is, and what the goal of the deal actually is - The three levers of return, and why multiple expansion is the one you do not get credit for - IRR versus multiple of money, and the lookup table to memorize - The paper LBO, worked out loud - Why a strategic buyer can often pay more than a financial sponsor - Where are markets right now, pitch me a stock, and the deal you have been following Want the whole run checked in one sitting? I run a 90-minute mock interview, a full simulation and then rapid-fire technicals on whatever broke. Book a free 15-minute intro to see if it is a good fit. Part 6 of IB Technicals, a six part run on Tuesdays and Thursdays. Each night covers how the concept works and, more importantly, how to actually answer the questions on it, with the stories and details behind them. Each one stands alone, so jump in anywhere. I'm the founder of OFFERGOBLIN and ex-Centerview tech.