LBO & Paper LBO
How do you estimate IRR from MOIC for a 3-year hold without a calculator?
Model answer
Use roots of 3. 2.0x in 3yr = 2^(1/3) - 1 ≈ 26%; 2.5x ≈ 36%; 3.0x = 3^(1/3) - 1 ≈ 44%. Memory hooks: 2x/3yr ≈ 26%, 3x/3yr ≈ 44%. Sanity check…
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