Solving for purchase price of private company
Hello All,
I'm stuck trying to figure out a problem for a practice LBO modeling test and haven't seen the answer in any other forum. In this practice test, I'm given four years of a historical income statement (revenue through EBITDA) and the last two years of balance sheet data. No assumptions are given but presuming the PE shop wants to achieve a 20% IRR, how can I back into my purchase price? The company is private at the time of acquisition. There are no exit multiple assumptions provided. I can calculate the current EV from the balance sheet, but that seems to straight forward. I also have enough information on revenue growth and expenses to forecast through exit. Any insight would be greatly appreciated.
The instructions also don't give any assumptions about debt. Does this mean I can just use similar assumptions for leverage and interest to what I have seen while working?
Thanks in advance.
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