medium · Private Equity paper-lbo
An LBO is modeled with an entry EV of $500M and $300M of debt. Over 5 years, the company generates enough free cash flow to pay down $120M of debt.
If the EV is $722.5M at exit, what is the 'Leverage Effect' (or 'Deleveraging') contribution to the total equity value created?
- $120M
- $180M
- $222.5M
- $342.5M
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