I recently had a question on calculating exit year EBITDA in an LBO. I don't remember the exact details but in essence, I was given: entry multiple (10x EBITDA), yr 1 EBITDA ($100), D/E Financing (50/50), Debt paydown in yr 5 of $25, MOIC yr 5 of 3x, and asked to calculate yr 5 exit EBITDA.
This is what I remember. Is anyone aware of the question and/or how best t go about answering it? Thx!
| +2,828 | Bank of America - Juniors Strike to start Monday May 6th | 304 | 3m | |
| +736 | BOFA ALREADY TRYING TO COVER UP THEIR TRACKS | 74 | 1h | |
| +475 | This is a dark day for Wall Street. | 30 | 4h | |
| +160 | Big Layoff at Barclays - 5/1/24 | 86 | 14h | |
| +150 | Analyst at Bofa FIG-Thoughts | 27 | 8s | |
| +120 | “Americans just work harder” | 54 | 1d | |
| +108 | Shame on you, BofA. But also, the industry needs to change. | 16 | 2h | |
| +101 | BofA List | 22 | 1h | |
| +72 | Sleeping on Jefferies??? | 35 | 1d | |
| +64 | Hey WSJ, BBG, CNBC, FT, it's been more than 72 hours that this BofA IBD Associate was reported dead | 5 | 3h |
Career Resources
Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.
Throw it in goal seek
https://media1.giphy.com/media/MayGBc8GBkJLlsGp73/giphy.gif" alt="Question on calculating Exit Year EBITDA in an LBO" />
Solid call and great GIF. I guess i'm more focused on how to answer in a video interview.
You’d need an exit EBITDA multiple (or make one up) to figure it out. You can find your equity entry amount using the multiple and exit amount using MOIC. I also assume your debt just gets paid down during that five year period less the $25.
I like this question. If assume paydown of net debt = $25 per year instead (High capex?) then 5 year paydown is $125. Assume entry = exit.
Entry ebitda = $100 times: Entry mult. = 10.0x Entry EV = $1,000
d/e = 50/50 Entry (net) debt = $500 Equity check = $500
Entry net debt = $500 less: Cumulative net debt paydown = $125 Ending net debt = $375
Equity check = $500 times: MOIC = 3.0x Sponsor return $ at exit = $1,500
Sponsor return (equity) = $1,500 plus: net debt = $375 EV at exit = $1,875 divided by: assumed exit mult = 10.0x
EBITDA at exit = $187.5
Yes, this is exactly on point and extremely helpful. Thanks so much man!
I got you bro!
At nemo placeat quasi rerum. Labore dolore aliquam qui. Quia rerum consequatur temporibus incidunt.
Omnis et beatae quos quos. Mollitia officia sed quaerat occaecati architecto. Repellat saepe harum iste ut aut et et. Quod illo quo aliquid quas animi ullam. Natus esse quidem vel cupiditate.
Magnam aut quasi voluptatem doloribus esse quod deleniti. Placeat quidem quas qui quis. Magnam perferendis provident voluptate dicta. Debitis vel quia dolores quibusdam tenetur doloribus. Placeat voluptatibus nihil consequuntur ut doloribus. Consequuntur est dolorem velit qui. Qui voluptate soluta nihil quas.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...