How does the IRR change if your model goes from 8x entry and 8x exit to 12x entry and 12x exit? (Still assuming no multiple expansion as entry multiple = exit multiple).
All that is different now is that absolute multiple you enter and exit at is higher. After running this mechanically in an excel Paper LBO Model it seems that lower absolute levels of entry/exit multiple produce higher IRR than higher absolute levels (ex. IRR is higher with 3x exit and 3x entry relative to IRR with 10x exit and 10x entry).
Can someone provide a conceptual reasoning as to why this is the case?
Thank you
Velit qui quos ab quia. Rerum qui enim iusto. Saepe sint dicta voluptate dolorum.
Dicta vitae quo et sed odio. Ut dicta odio fugiat. Molestias eius fugiat enim ut qui. Enim qui magnam sed quam vitae omnis consequatur. Quaerat velit quos suscipit numquam.
Ea hic omnis odio velit sed. Incidunt molestias quis sed est quia. Consequatur voluptate perspiciatis nisi vel beatae.
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...