Guided Walkthroughs
Paper LBO — Step 7 of 10: Exit at the same 10.0x multiple. What are the sponsor's equity proceeds?
Model answer
Exit EV = Year 5 EBITDA × exit multiple = 150 × 10.0 = $1,500M. Equity proceeds = exit EV − exit net debt = 1,500 − 400 = $1,100M. Trace the $700M of equity value creation (1,100 vs the $400M check)…
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