Technical Questions - Renewable Project

For a renewable (solar) project that has a finite life (50 years, that is the useful life of assets), how does a PE firm determines the following:
Entry multiples
Exit multiples.
Is there any consideration given the assets have a finite life?

  1. Entry multiple
  2. Exit multiple

Is there any consideration given the assets have a finite life?


By evaluating the cash flow profile of the project. Contracted cash flows are awesome as provide more revenue visibility. Your hurdle rate / required return determines the price you pay and then divide that price by the first year net production (mwH) of the project and its EBITDA to benchmark against the market.   

Most Helpful

If an asset has a finite life then you only value it until the end of its life. There might be some residual value (the metal from the physical solar panels and interconnection lines) and some residual costs (labor to take apart the project). You would take a rough view of that residual value / cost and that would be your “exit value” on the project - it would not be based on a multiple. If you wanted to get really aggressive then maybe you would take a view on repowering the project at the end of its useful life instead and assume some set of costs, a new contract, etc… which you could translate to a “multiple” on the projects last regular-way useful life year, but that would be an unusual approach.

The entry would be based on a hold-to-life dividend discount model, not based on a multiple. In general, multiples are just an approximation of value as a shortcut to a proper DCF. With a defined useful life you just focus on the cash flows of the project during its useful life. Also, as a side note, multiples in the renewables space are particularly noisy and complicated because of tax equity. 

The one change to this broad comment would be a renewable platform as opposed to a single project. THEN you might treat everything as more of a going concern and think about it in terms of growth of the platform, replenishment of the project pipeline, etc... I’d always cross-check against a hold to life version based on the operating and known development projects to understand what I am assuming about value attributable to steady-state vs. growth and not accidentally overpaying for speculative growth.


Exercitationem et ut dolor repellat assumenda pariatur fuga. Qui molestiae expedita amet est iusto molestiae. Expedita aut eligendi voluptatem et ut quis doloremque aut.

Possimus possimus magni pariatur et omnis ad enim. Laborum suscipit rem commodi beatae ut commodi dolores. Inventore et cum blanditiis animi suscipit voluptatum. Quo perferendis omnis in ipsa dolores. Quo quis non velit quos aut occaecati minima.

Career Advancement Opportunities

June 2024 Private Equity

  • The Riverside Company 99.5%
  • Blackstone Group 99.0%
  • KKR (Kohlberg Kravis Roberts) 98.4%
  • Warburg Pincus 97.9%
  • Bain Capital 97.4%

Overall Employee Satisfaction

June 2024 Private Equity

  • The Riverside Company 99.5%
  • Blackstone Group 98.9%
  • KKR (Kohlberg Kravis Roberts) 98.4%
  • Ardian 97.9%
  • Bain Capital 97.4%

Professional Growth Opportunities

June 2024 Private Equity

  • The Riverside Company 99.5%
  • Bain Capital 99.0%
  • Blackstone Group 98.4%
  • Warburg Pincus 97.9%
  • Starwood Capital Group 97.4%

Total Avg Compensation

June 2024 Private Equity

  • Principal (9) $653
  • Director/MD (22) $569
  • Vice President (92) $362
  • 3rd+ Year Associate (91) $281
  • 2nd Year Associate (206) $268
  • 1st Year Associate (389) $229
  • 3rd+ Year Analyst (29) $154
  • 2nd Year Analyst (83) $134
  • 1st Year Analyst (246) $122
  • Intern/Summer Associate (32) $82
  • Intern/Summer Analyst (316) $59
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”


From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”