medium · Private Equity paper-lbo

Consider an LBO of FoodCo with a Year 0 EBITDA of $80M and an entry multiple of 8.0x.

If the business is sold in Year 5 at the same multiple after EBITDA has grown to $120M and debt has been reduced by $100M, what is the total equity value creation attributable to EBITDA growth?

  1. $960M
  2. $160M
  3. $320M
  4. $420M

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