Private Equity & Exit Opps
Full paper LBO: $100 EBITDA bought at 10.0x with 6.0x of debt at 10% interest. EBITDA grows $10/year for 5 years. Annual FCF = EBITDA − interest ($60 fixed, for simplicity) − $40 of capex, taxes, and working capital. Exit at 10.0x. Walk to MOIC and IRR.
Model answer
Entry: EV = 100 × 10 = $1,000; debt = $600; equity = $400. EBITDA path: 110, 120, 130, 140, 150. FCF each year = EBITDA − 60 − 40: yr1 = 10, yr2 = 20, yr3 = 30, yr4 = 40, yr5 = 50 → cumulative…
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