LBO & Paper LBO
Re-run that deal but assume the company pays down $300 of debt over the hold. New MOIC and IRR?
Model answer
Entry equity unchanged at $400. Exit EV still $1,300. Net debt at exit = 600 - 300 = $300. Exit equity = 1,300 - 300 = $1,000. MOIC = 1,000/400 = 2.5x. IRR = 2.5^(1/5) - 1 ≈ 20%. So $300 of…
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