Valuation Question
Quick question guys. I think I am thinking through this wrong, as I calculated an 8.66x exit multiple. Anybody know how to answer the question below?
If a company has $30mm EBITDA, $20mm FCF, $100mm in debt and can sell itself for $300mm TEV, what is the break-even multiple after 2 years assuming no EBITDA growth?
So today the company was sold for 10x EBITDA and the sponsor put 200m equity. In 2y the company will have generated 20*2 of cash, and has same EBITDA so you need to solve 30X-100+40=200 which implies X=8.66x ie a c1.4x reduction in multiple vs entry. So you are correct.
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