If you could lever up let's say hypothetically 99% in the capital structure of a potential target in an LBO, would you do it? Why and why not?
My guess is that yes, in concept the more debt you take on over your own equity, the higher returns PE funds will find, but there is a risk that comes into play when you are over-levered unless the company is highly self-sustaining and generating a large amount of CF year over year. Is this the right answer?
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