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We conclude our special series on private market valuation myths with:
Myth 3: Leveraged capital structures lead to conflicts of interest amongst private equity sponsors and lenders that can create negative outcomes and lower valuations.
We asked Ron Kahn, Lincoln International’s valuation chief, to help parse this issue.
“If you look at public company capital structures,” he told us, “they often have complicated financings across various layers of debt and equity. These capital providers don’t usually share investment priorities, so economic interests can go crossways if market sentiment changes...
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