Same growth, same flat exit multiple — why does entry price still dominate returns? Compare buying $100 EBITDA at 8x vs 12x, each with $500 of debt, EBITDA to $130 in year 5, $150 of paydown, exit at the entry multiple.

At 8x: EV 800, equity = 300. Exit EV = 130 × 8 = 1,040; exit debt 350; exit equity = 690; MOIC = 690/300 = 2.3x → ~18% IRR. At 12x: EV 1,200, equity = 700. Exit EV = 130 × 12 = 1,560; exit debt 350; exit equity = 1,210; MOIC = 1,210/700 ≈ 1.7x → ~12% IRR. Identical company, identical operating performance, identical paydown — 6 points of IRR difference purely from price. Why

• the same EBITDA growth is a smaller PERCENTAGE of a bigger EV
• the same $500 of debt is a smaller share of a 12x price, so the equity base is larger and leverage does less work
• equivalently, a higher multiple = lower FCF yield on price, so the deal 'earns' less per year per dollar invested. This is the arithmetic behind 'you make your money when you buy' — and why sponsors would rather stretch on almost anything other than entry multiple.