medium · Private Equity value-creation
In a 'Platform / Build-Up' strategy, a PE firm acquires a platform company with $20M in EBITDA at an 8.0x multiple. It then acquires three 'add-ons' with a combined $15M in EBITDA at a 5.0x multiple.
If the combined entity eventually exits at an 8.5x multiple, what is the value created purely from 'multiple arbitrage' on the add-ons?
- $52.5M
- $75.0M
- $62.5M
- $127.5M
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