LBO - Why is revenue seasonality a problem?
Hi all, why is revenue seasonality (e.g. in retail) a problem for LBO? Dent service (interest payments/ amortization) are paid at the end of the year anyways?
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Interest is paid quarterly
thank you very much
Interest is paid quarterly (sometimes even monthly). Senior debt amortization is paid quarterly..,
In the end it all comes down to cash flow. If if revenue is seasonal and you have a high fixed costs base paired with an big unfavorable swing in working capital, you could find yourself with no cash or default on your debt.
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