hard · Investment Banking
A private equity firm acquires a target for an entry enterprise value of 10.0x LTM EBITDA of $100 million. The deal is funded with $600 million of debt and $400 million of sponsor equity. After 5 years, the EBITDA has grown to $150 million, and the firm exits at the same 10.0x multiple. During the hold period, $250 million of debt was repaid using free cash flow.
What is the MoIC and the approximate IRR for this investment?
- 2.50x MoIC, 20.1% IRR
- 3.75x MoIC, 30.3% IRR
- 2.25x MoIC, 17.6% IRR
- 2.88x MoIC, 23.5% IRR
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