Which of the following is NOT listed as a way to boost returns in an LBO?

• A. Increase leverage.
• B. Sell at a higher multiple.
• C. Increase margins by reducing expenses.
• D. Reinvest cash into working capital to boost growth.

Answer: (D)

In an LBO, value is typically created by increasing the equity multiple through three main levers: using leverage to magnify returns, squeezing margins to boost cash flow, and exiting at a higher multiple to lift enterprise value. Reinvesting cash into working capital to boost growth is not a typical lever for raising equity returns. It ties up cash in the business and can reduce free cash flow available to pay down debt or fund value-creating improvements, which suppresses the potential upside for equity holders. The other options directly enhance profitability or the exit value, so they are classic ways to boost returns, while reinvesting in working capital is not.