How do Dividend Payments work in LBO?
I am making a financial model and having a hard time understanding how dividend payments work.
In the model, I am assuming that:
- 20% is my own equity
- 70% is bank debt
- 10% is owner equity
In this case, how would I split dividends amongst myself and the current owner?
Will the current owner get 10% of dividends or would it be 33% of dividends (since there is 30% equity, 70% bank debt)
33%, bank debt doesn’t get dividends
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