medium · Private Equity value-creation

A sponsor acquires a business for $500M using $300M of debt. At exit, the Enterprise Value is $800M and the debt is $100M.

What portion of the $500M in total equity value creation is attributable to deleveraging (debt paydown)?

  1. 500M
  2. 200M
  3. 100M
  4. 300M

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