medium · Private Equity paper-lbo
An LBO transaction is entered at an 8.0x EV/EBITDA multiple with $300M of net debt and $200M of sponsor equity. At the end of Year 5, the company is sold at an 8.5x multiple. EBITDA grew from $62.5M to $85.0M, and $120M of debt was paid down.
What is the equity value creation attributable specifically to multiple expansion?
- $31.2M
- $42.5M
- $120.0M
- $180.0M
Sign up free to see the explanation and track your rank →
More Private Equity paper-lbo practice
- If net debt remained constant at $200M throughout the hold, what was the primary source of
- If EBITDA remains exactly the same and no debt is paid down, which lever is the sole sourc
- A practitioner is calculating the 'Envy Ratio' in an LBO. If the management team's MoIC is
- What is the approximate internal rate of return (IRR)?
- If the sponsor achieved a 2.18× MoIC, what is the approximate IRR?
- After 4 years, EBITDA has grown to $40.8M and debt has been paid down from $126M to $33.6M
- If the company is sold for 3.0× the total exit equity, what is management's MOIC?
- If EBITDA remained flat at $100M and debt was reduced by $200M, which factor was the large