LBO & Paper LBO
Show with numbers how EBITDA growth drives returns. Entry: 100 EBITDA at 10x, 60% debt. Exit in 5 yrs: EBITDA grows to 150 at the same 10x, debt fully unchanged.
Model answer
Entry EV = 100 × 10 = 1,000. Entry debt = 60% × 1,000 = 600; entry equity = 400. Exit EV = 150 × 10 = 1,500. If debt is unchanged at 600, exit equity = 1,500 − 600 = 900. MOIC = 900 / 400 = 2.25x.…
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