Technically it could go either way, but in most cases the LBO will give you a lower VALUATION.

Here's the easiest way to THINK about it: with an LBO, you do not GET any value from the cash flows of a company in between Year 1 and the final year - you're only valuing it based on its terminal value.

With a DCF, by contrast, you're taking into account both the company's cash flows in between and its terminal value, so values tend to be higher.

Note: Unlike a DCF, an LBO MODEL by itself does not give a SPECIFIC valuation. Instead, you set a desired IRR and determine how much you could pay for the company (the valuation) based on that.

Technically it could go either way, but in most cases the LBO will give you a lower valuation.

Here's the easiest way to think about it: with an LBO, you do not get any value from the cash flows of a company in between Year 1 and the final year - you're only valuing it based on its terminal value.

With a DCF, by contrast, you're taking into account both the company's cash flows in between and its terminal value, so values tend to be higher.

Note: Unlike a DCF, an LBO model by itself does not give a specific valuation. Instead, you set a desired IRR and determine how much you could pay for the company (the valuation) based on that.