LBO Model - Management Option Pool

How would you model this in an lbo model test during an interview?

My thoughts:

Would you assume some share count (90 shares) for the sponsor investment with a strike price = sponsor equity investment / 90 share

The mgmt would receive 10 options with a strike price per above.

Then once you exit in year 5, you'd take exit equity value divided by 90 shares = Ending Share Price

Assuming (in almost all cases due to value creation) Strike Price Ending Share Price, management receives 10 shares. There are now 100 shares (90% sponsor ownership / 10% management ownership)

Returns calc'd as follows:

Sponsor investment = the full $$ sponsor equity investment Sponsor exit equity = 90% (90/100 shares) of ending equity value

Mgmt IRR is essentially infinite or N/A since they didn't put any $$ in.