hard · Private Equity & LBOs
An LBO is financed with 60% debt at a 10.0% weighted average interest rate.
If EBITDA grows 10% and the exit multiple is the same as the entry multiple, what is the primary driver of the 25%+ IRR commonly observed in such scenarios?
- Multiple expansion
- Reduction in the corporate tax rate
- Operating leverage and debt paydown
- Arbitrage of the OID
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