hard · Private Equity paper-lbo
Consider an LBO of Meridian Industrial Services with an entry enterprise value of $500 million (10.0x EBITDA of $50 million) and entry net debt of $300 million. After a five-year hold, EBITDA grows to $80 million, the exit multiple expands to 11.0x, and net debt is reduced to $200 million via free cash flow.
What is the sponsor's Internal Rate of Return (IRR)?
- 19.3%
- 27.7%
- 21.5%
- 34.8%
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