paper-lbo — Private Equity Practice Questions

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1. If net debt remained constant at $200M throughout the hold, what was the primary source of the equity value in
2. If EBITDA remains exactly the same and no debt is paid down, which lever is the sole source of the equity retu
3. A practitioner is calculating the 'Envy Ratio' in an LBO. If the management team's MoIC is 6.0× and the PE spo
4. What is the approximate internal rate of return (IRR)?
5. If the sponsor achieved a 2.18× MoIC, what is the approximate IRR?
6. After 4 years, EBITDA has grown to $40.8M and debt has been paid down from $126M to $33.6M. If the exit multip
7. If the company is sold for 3.0× the total exit equity, what is management's MOIC?
8. If EBITDA remained flat at $100M and debt was reduced by $200M, which factor was the largest driver of equity
9. If $60M of debt was paid down during the hold, what is the realized MoIC for the sponsor?
10. How does the Year 3 dividend recap affect the Internal Rate of Return (IRR) compared to a 'no-recap' scenario
11. If the projected exit equity value is $100.0 million, what is the required ownership percentage for the invest
12. If the exit equity is $600M, what is management's MOIC with the ratchet?
13. If exit net debt is $247.3M (down from $430M at entry), how much of the $345.9M total value creation is due to
14. Which statement correctly describes the IRR impact?
15. If the exit multiple is 7.0× EV/EBITDA at the end of Year 5, what is the Exit Enterprise Value?
16. What is the value created from 'Multiple Expansion' alone?
17. If the sponsor targets a 3.0× MoIC over 5 years and expects the exit multiple to remain 10.0×, what must the e
18. What is the sponsor's share of the exit proceeds?
19. What is the approximate IRR?
20. If the deal is funded with 4.0× leverage, what is the initial equity check required from the sponsor?
21. A fund's Gross IRR is 25.0%. If management fees are 2.0% per annum, fund expenses are 0.5%, and carried intere
22. If net debt remained exactly the same, what percentage of the value creation is attributable to EBITDA growth?
23. A growth equity fund targets a 25% IRR over a 5-year period… — What is the required Future Value (FV) of this
24. What is the exit equity value?
25. What is the IRR over the 5-year hold, assuming a single entry and exit cash flow?
26. If the EV is $722.5M at exit, what is the 'Leverage Effect' (or 'Deleveraging') contribution to the total equi
27. Using the standard three-bucket return attribution, what is the value created specifically by multiple expansi
28. If the entry equity was $200M, what is the approximate IRR?
29. If the MIP strike price is set at the entry valuation, what is the net value received by the MIP holders at ex
30. If the sponsor's original equity investment was 150m, what percentage of their initial capital is returned via