medium · Private Equity
A company is acquired for 8.0× trailing EBITDA of $50M. The sponsor uses a Management Equity Programme (MEP) where management invests $20M for 10% of the equity. An equity ratchet is in place: if the fund achieves ≥ 2.5× MOIC, management's stake increases to 20%.
If the company is sold for 3.0× the total exit equity, what is management's MOIC?
- 6.0×
- 3.0×
- 5.0×
- 2.67×
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