LBO & Paper LBO
Paper LBO: Entry EBITDA $100, entry multiple 10x, 6x leverage, no debt paydown, EBITDA grows to $130 at exit, exit multiple 10x, 5-year hold. Compute MOIC and IRR.
Model answer
Entry EV = 100 x 10 = $1,000. Debt = 6 x 100 = $600. Entry equity = 1,000 - 600 = $400. Exit EV = 130 x 10 = $1,300. With no…
The full, human-reviewed answer is in the bank.
Sign up free and Daily 10 serves you 10 questions a day from all 1,500+ — or go Pro for unlimited reps.
More from LBO & Paper LBO
- What is a leveraged buyout?
- What makes a company a good LBO candidate?
- What drives returns in an LBO?
- Why does using more leverage increase equity returns (when it works)?
- At a high level, how do you calculate the IRR or money multiple on an LBO?
- Name the three primary value-creation (returns) drivers in an LBO.