Once you have a functioning lbo model, with the EBITDA multiple as an input and IRR as an output, whats the best way to turn it around to ask the question- if this is the required IRR, what is the multiple? I tried goal seek on the IRR using the purchase multiple as the input, but get ridiculous answers. Thanks
Trending Content - Private Equity Forum
| +101 | Cognitive decline | 33 | 16h |
| +88 | Vibe-Working in Finance with AI ? What about you | 34 | 3d |
| +46 | PE VP: Thoughts on Quitting with Nothing Lined Up? | 18 | 8h |
| +30 | Those unemployed in PE 3+ months, how do you make progress every day? | 10 | 8h |
| +13 | How Cooked is Software PE? | 1 | 5d |
| +12 | co-investment / Allocator roles WLB | 4 | 1d |
| +12 | Indian PE Landscape | 2 | 3d |
| +12 | Is it possible to get no comments as an analyst? | 3 | 15h |
| +11 | LMM Startup PE Fund Vs. Tier 2 Consulting Firm | 3 | 4d |
| +10 | Firm Culture in PE | 4 | 3d |
Career Resources
For a given level of debt, you don't need to include the purchase price in your calculation. Take the exit enterprise value and subtract ending debt to get the exit equity value. Assuming you're looking at 5 years and a 20% target IRR, the initial equity value=exit equity value/(1.2^5). Add the amount of initial debt you can get to get the implied purchase EV.
Thanks. That worked although I also had to also subtract the fees to get there
Nesciunt vitae est animi nam. Voluptas corrupti consequuntur nisi aliquid reprehenderit ut. Eligendi saepe ut nemo. Ullam voluptate ut voluptates mollitia dolor ducimus ullam. Quia dolorem sed amet facilis asperiores nobis. Incidunt molestiae odit vel voluptas.
Repellendus laboriosam id nesciunt aut ullam vel nisi. Eum molestiae debitis maiores non voluptatem voluptas adipisci voluptas.
Ullam in maxime cumque atque et. Et qui possimus consectetur. Et quia ipsam dignissimos et et aut. Vero dolorem aspernatur cupiditate architecto facere officia non illum. Nobis voluptas voluptatem delectus eligendi.
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...