A large private equity investor who is considering a LBO of Marco Company. You feel you need to pay a 25% control premium to buy Marco Co. and the debt market will provide you with 6.0x leverage (i.e. Debt/EBITDA). Marco Company currently (i.e. pre-deal) has $8bn in debt, $25bn in equity and $4bn in EBITDA.

How much equity from your LBO fund do you need to invest to buy Marco Company.?

Answer rating: 100% (QA)

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