Private Equity & Exit Opps
Same company, two structures: EV $1,000 (EBITDA $100 at 10x), bought with either 4.0x or 6.0x of debt. Assume FCF after interest just covers reinvestment, so debt stays constant. Compare returns if exit EV is $1,200 — and if it's $800.
Model answer
Structure A (4.0x): debt 400, equity 600. Structure B (6.0x): debt 600, equity 400. Upside exit ($1,200): A equity = 1,200 − 400 = 800 → 800/600 ≈ 1.33x (~6% IRR over 5 years); B equity = 1,200 − 600…
The full, human-reviewed answer is in the bank.
Sign up free and Daily 10 serves you 10 questions a day from all 2,000+ — or go Pro for unlimited reps.
More from Private Equity & Exit Opps
- At a high level, how does private equity recruiting differ from investment banking recruiting?
- What's the difference between on-cycle and off-cycle PE recruiting?
- Should an IB analyst go on-cycle or wait for off-cycle? What are the real trade-offs?
- What role do headhunters actually play in PE recruiting, and why are they called gatekeepers?
- How should you prepare for and handle the headhunter intro call?
- What should you tell headhunters about your fund preferences — and why does consistency matter so much?