Mental Math/Paper LBO question
Hi, just saw this question for practice and was wondering how one would approach this paper LBO question:
Exit multiple of 10x, EBITDA cagr of 15% for 5 years. Cash conversion 100% (ie EBITDA= FCF)
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What should my entry multiple be to hit 2x MOIC?
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What should my entry multiple be to hit 15% IRR?
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What if I fund this deal with 50% debt? What would be the answer to the above 2 questions?
Question doesn't sound complete, can you double check?
Also if helpful 15% CAGR (or IRR) in 5 years is 2x MOIC - you should memorize that.
Have kept in mind 2x in 5 years is equivalent to 15% CAGR.
Also double checked and the question is complete.
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