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LBO

also referred to as: lbos

4 statements across 3 episodes · 1 bullish · 3 bearish · 3 people on the record · first statement Feb 17, 2020 by Dan Rasmussen · across every show →

Everything said about LBO, oldest first

Feb 17, 2020 negative
Insight
Heavy LBO debt prevents compounding businesses from reinvesting for growth
“Because a firm that has eight X debt to EBITDA, that is taking out all of its excess free cash flow to pay interest, can't reinvest for growth. So why buy a compounder and lever it up? In theory, you should have much higher return opportunities other than payi…”
Dan Rasmussen Feb 17, 2020 ▶ 15:07 Dan Rasmussen – Private Equity Risk and Public Equity Opportunity at Verdad Advisers (First Meeting, EP.15)
Feb 17, 2020 bearish
Prediction Not checkable as stated
25% to 30% of LBOs would go bankrupt in a normal recession
“And so much of private equity today of LBOs is single B or triple C type quality, that I would say 25 to 30% of LBOs would go bankrupt in a normal business cycle, normal recession with normal levels of delinquency.”
Dan Rasmussen Feb 17, 2020 ▶ 21:58 Dan Rasmussen – Private Equity Risk and Public Equity Opportunity at Verdad Advisers (First Meeting, EP.15)
Jan 18, 2021 positive
Assertion Not checkable as stated
Vanguard observes return persistence at the individual manager level in PE
“Most of the studies say, In LBO or in VC, what type of quartile regime switching do you have from first, second, third, fourth quartile, as opposed to just at the manager level? And at the individual manager level, we do see persistence.”
Fran Kinniry Jan 18, 2021 ▶ 50:05 Fran Kinniry – The Comfort of Paradox at Vanguard Group (Capital Allocators, EP.173)
Nov 17, 2025 negative
Insight
Lyon: Generalist Auction-Driven PE with Max Leverage Fails Long-Term
“Being a generalist, looking at auctions and trying to get as much leverage as possible and do an LBO model, I don't think was a winning recipe for long-term success.”
David Lyon Nov 17, 2025 ▶ 14:58 David Lyon – Hybrid Capital Solutions for Private Assets (EP.471)
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