medium · Investment Banking valuation-core
A financial sponsor is modeling a 5-year LBO. The entry multiple is 8.0x EBITDA and the exit multiple is also assumed to be 8.0x.
If EBITDA grows by 20% over the period and half of the initial debt is repaid, which factor contributes most to the sponsor's equity return?
- The Return on Assets
- Multiple Expansion
- Debt Repayment (Deleveraging)
- EBITDA Growth
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