LBO & Paper LBO
What IRR corresponds to a 2.0x MOIC over a 5-year hold? Show the shortcut.
Model answer
IRR = 2.0^(1/5) - 1 ≈ 14.9%, so ~15%. The rule of thumb worth memorizing: a 2x over 5 years is ~15% IRR. Related anchors: 2x over 3 years ≈ 26%; 2x…
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