What would make a good lbo candidate and can you provide me with an example? Okay, so an ideal lbo candidate should have most or preferably all of the following characteristics.

It must have steady predictable cash flow generation.

It must operate in a mature industry with defensible Market positioning.

It must have a business model with a reoccurring Revenue component.

Strong committed management team has always good.

It must have Diversified revenue streams with minimal cyclicity.

and low capex requirements and working capital needs Is great if it's currently undervalued by the market as in a low purchase multiple. So Amadeus is a good example of an lbo candidate. It operates as the global leader in a sector that's growing Airline it and travel and it has a high market share. I think of around 30% in an oligopoly.

Barriers to entry are very high. So there's a low risk of substitution and it's business is very sticky and therefore predictable.

There's relatively little cyclicality as it's revenue and ebitdoll margins also around 30% I think have continued to grow steadily other than during covid of course across a range of service offerings.

The management team is strong and committed the ability to leave. This business is high due to the strong cash flow generation.

If the price were to fall to a low to mid teens EV to e-bit Door multiple, this would make a very attractive lbo candidate. You could either relist it upon exit merge of one of the other major competitors for example saber or sell to private equity.

This is a commonly asked question which is trying to see whether you know, what traits make a company an attractive private Equity acquisition candidate. They are not looking for original answers over here but accepted characteristics of companies that allow for protection of invested capital on the one hand and growth and predictability on operational performance on the other. This is also a test to see where the candidates are accurate or whether they get caught up in long-winded answers here. The interviewee is succinct with the list of attractive traits not all have to be given and then is able to use those same traits with the live example that they prepared ahead of time and that they know well the candidate has kept this answer technical without showing much personal preference going deeper into what attractions exist in the sector the company operates in what the company does your knowledge of management or why what the company sells as valuable to customers can give the answer a more personal touch and Something the interviewer will remember.