hard · Private Equity & LBOs
A buyout fund acquires a company for $1,000M total enterprise value, funded with $600M of debt and $400M of equity. At exit five years later, EBITDA has grown from $100M to $140M, the EV/EBITDA exit multiple equals the entry multiple, and $250M of debt has been repaid from cumulative free cash flow.
Using value-bridge attribution, how much of the total gross MOIC value creation is attributable to EBITDA growth versus deleveraging, and which dominates?
- EBITDA growth contributes $400M and deleveraging $250M; EBITDA growth dominates the value bridge
- EBITDA growth contributes $250M and deleveraging $400M; deleveraging dominates the value bridge
- Both contribute $250M each, so neither dominates and the bridge is balanced
- EBITDA growth contributes $560M and deleveraging $140M; EBITDA growth dominates because of multiple leverage
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