medium · Private Credit & Debt fund-structures-returns-economics
An LBO structure uses a Management Ratchet where management's 10% equity stake increases to 20% if the sponsor achieves ≥ 2.5x MOIC. The sponsor and management together invest 200M (180M sponsor, 20M management).
If the company is sold for 600M of equity value, what is the sponsor's realized MOIC?
- 3.00x
- 2.50x
- 2.67x
- 2.40x
Sign up free to see the explanation and track your rank →
More Private Credit & Debt fund-structures-returns-economics practice
- What is the fund's TVPI (Total Value to Paid-In) multiple?
- What is the Dividend Coverage ratio?
- What is its current Debt-to-Equity (Leverage) ratio?
- A BDC (Business Development Company) is required to distribu… — What is the primary benefi
- An investor is reviewing a fund's performance and sees a DPI… — What does this suggest abo
- If the fund's net TVPI is only 1.15×, what is the most likely explanation?
- If management achieves a 6.0x Money Multiple (MOIC) on their personal investment, while th
- What is the Sponsor's Money Multiple (MOIC)?