Monthly Archives: March 2022

Home 2022 March

Would a company with a capital lease have a higher or lower EV / EBITDA multiple compared to an operating lease? (1 min)

A company with a capital lease would have a lower EBITDA multiple. A capital lease involves paying interest and principal repayments, which are both cash flows that happen below EBITDA. EBITDA would be higher as a result, and since EBITDA is in the denominator of EV / EBITDA, the multiple would be l...
Read More

What is debt sizing in project finance? (1 min)

Debt sizing is used in project finance (infrastructure) to figure out how much debt can be raised to support an infrastructure project each month / year. As dictated by the debt term sheet, there is usually a maximum leverage ratio (eg maximum of 70% debt and 30% equity) and a minimum debt service c...
Read More

What are the advantages and disadvantages of leading a deal by yourself vs. doing the deal with other PE firms as partners? (1 min)

The advantage of being the only PE firm involved in the LBO is that you have complete control. You can dictate the type of debt financing to be raised and take full control when negotiating the financing terms with banks / institutions. You can choose whether or not to hire an investment bank as an ...
Read More