(Bloomberg) -- AT&T Inc.’s decision to pursue Yahoo! Inc. could be a death knell to efforts by private equity firms hoping to acquire the beleaguered internet company.

The telecommunication giant’s presence puts pressure not just on Verizon Communications Inc. and Quicken Loans Inc. founder Dan Gilbert -- backed by Warren Buffett -- to raise their offers. It also adds another deep-pocketed strategic company to the mix of bidders for Yahoo’s core web assets.

Private equity firms, which often rely heavily on debt to finance buyouts, realize they would struggle to win a bidding war with well-capitalized acquirers while still generating the types of returns demanded by their investors, according to people familiar with the situation, who asked not to be identified because the information is private.

Yahoo’s core assets could fetch at least $4.5 billion, or six times adjusted earnings, according to Jason Helfstein, an analyst with Oppenheimer & Co.

Given Yahoo’s declining profitability and revenue, lenders aren’t likely to provide financing of more than four times adjusted earnings before interest, taxes, appreciation and amortization, people familiar with the matter said. Yahoo projects adjusted Ebitda of $700 million to $800 million this year. Using the midpoint of the range implies a ceiling of about $2.5 billion in debt based on that multiple.

Because buyouts are typically structured as two-thirds debt to give private equity firms a 20 percent return on investment, the firms will find it difficult to bid much more than $4 billion for the company, even allowing for their backers to make a co-investment contribution.

Declining Asset

Those firms can better compete with corporate suitors for a target business that’s growing. In Yahoo’s case, it’s an asset whose value is declining. While buyout firms do buy declining assets, it’s usually once strategic suitors have passed.

“A corporate buyer is in a more strategic position to win this asset,” Helfstein said. “I think ultimately this will get sold at some type of valuation that will make sense for the company.”

Yahoo’s adjusted Ebitda was about $950 million in 2015 -- a decline of about 30 percent from the previous year. Revenue, minus sales passed onto partners, fell 7 percent last year.