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

 
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