Private Equity & Exit Opps
Paper LBO: buy a company with $100 of EBITDA at 8.0x, using 5.0x of debt. EBITDA grows $5/year for 5 years; the company generates $30/year of FCF for debt paydown; exit at 8.0x. MOIC and IRR?
Model answer
Entry: EV = 100 × 8 = $800; debt = 5 × 100 = $500; equity check = 800 − 500 = $300. Projection: EBITDA reaches 100 + 5×5 = $125 in year 5. Debt: cumulative paydown = 30 × 5 = $150, so exit debt = 500…
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