Edit- figured it out. should not have been including cash / min cash, or exit fees in the calc. Leaving this up in case it's helpful to someone at some point
Hey all,
I have a pretty specific question here, so please let me know if more detail is needed.
I am trying to reconcile calculating impl. entry multiple given a target IRR. I am taking the exit sponsor equity (can provided specifics on calc if helpful) and discounting it back using the IRR. I am then adding: Target Cash (50), New Debt (face value), and Mgmt. Roll (dynamic calc); and subtracting: Adv. Fees (entry 25 + exit 20), Fin. Fees (45), Min. Cash (25), and OID (45).
I used goal seek to determine what impl. entry multiple gets me exactly 25% IRR and used it to figure out how much I am off by in my above calc - I am off by 45. Given similar numbers above, this may be due to netting of a couple items but not sure.
Alternative to looking at my #s would be if someone could explain how to treat target BS cash, min cash and OID when calculating exit equity / backing into entry multiple. Any help is appreciated. thank you!
I'm guessing you FINALLY landed that private equity interview. Now what? Well, I can tell you that you DON'T want to bomb the LBO modeling test.
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