hard · Investment Banking ma-lbo
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
Sign up free to see the explanation and track your rank →
More Investment Banking ma-lbo practice
- During the sell-side process, a 'stapled financing' package… — What is the primary strateg
- Which of the following is a 'Material Adverse Effect' (MAE) carve-out typically found in a
- A strategic acquirer is calculating the Present Value of syn… — What is the Terminal Value
- In the context of a virtual data room (VDR), why does a sell-side advisor often 'stage' th
- During Phase I of a sell-side process, the advisor performs… — What is the primary purpose
- In the 'Sources and Uses' for an LBO, where does the 'Management Rollover' appear, and how
- Which document is the 'teaser' designed to lead to?
- Which component of the LBO 'Capital Stack' typically has the lowest cost of capital and th