LBO & Paper LBO
What is original issue discount (OID) in LBO financing, and how does it flow through Sources & Uses and the model?
Model answer
OID means the debt is issued below par — e.g., a term loan sold at 98 gives the borrower 98 cents of cash per dollar of face value, but the borrower owes the full 100 at maturity. In Sources & Uses…
The full, human-reviewed answer is in the bank.
Sign up free and Daily 10 serves you 10 questions a day from all 1,500+ — or go Pro for unlimited reps.
More from LBO & Paper LBO
- What is a leveraged buyout?
- What makes a company a good LBO candidate?
- What drives returns in an LBO?
- Why does using more leverage increase equity returns (when it works)?
- At a high level, how do you calculate the IRR or money multiple on an LBO?
- Name the three primary value-creation (returns) drivers in an LBO.