medium · Private Equity paper-lbo
Peak Gear was acquired for $500M (10.0x entry multiple on $50M EBITDA). Five years later, it is sold for $880M (11.0x exit multiple on $80M EBITDA). Entry net debt was $300M and exit net debt is $200M. Total equity creation is $480M.
What percentage of the total equity value creation is attributable purely to deleveraging (debt paydown)?
- 20.8%
- 33.3%
- 62.5%
- 11.4%
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