medium · Investment Banking
An LBO model shows a 5-year IRR of 18%. The sponsor wants to reach a 20% IRR target.
Which of the following changes, held in isolation, would most likely achieve this?
- Increasing the capital expenditure (Capex) budget for the company.
- Extending the holding period from 5 years to 7 years.
- Reducing the amount of leverage used in the transaction.
- Lowering the entry purchase price multiple by 0.5x.
Sign up free to see the explanation and track your rank →
More Investment Banking practice
- What is the Multiple on Invested Capital (MOIC)?
- What is the control premium?
- Which valuation methodology would likely produce the 'floor' valuation for a mature indust
- What is the Multiple on Invested Capital (MOIC)?
- If a company has an Unlevered Free Cash Flow (UFCF) of $500 million in Year 5, a WACC of 1
- What is the 3-year Compound Annual Growth Rate (CAGR)?
- If a company's Net Debt is negative, what is the relationship between its Equity Value and
- What is the Multiple on Invested Capital (MOIC)?