What would be the gross return to a buyer after 5-years (MoM and IRR) assuming 12.5x LTM entry = exit
Anyone know how to go about this? I have the below as a starting point for this question. Many thanks!
Solve for LFCF, then calculate equity value at exit: MOIC: 2.85×, IRR: 23.3% per annum over 5 years
thanks! do you mind if i dm you my version
wait how can you have 2.85x and 23.3% IRR in 5 yrs, that doesn't mesh?
Doesn’t it? 25 is 3
Ebitda*multiple - Net debt - mgmt options proceeds = equity value to common
That times sponsor % = sponsor equity value
That divided by initial check = moic
Net debt = net debt at close - total cumulative levered FCF which you’ll have to calculate + any new debt raised during hold
Took brief glance looks like you have pik which will accrue at 13% to the BS include that in net debt
thanks!
yea i was just confused if the assumptions were for the m&a or enty multiples for the company. confusing how to read them. also debt not paid off if exiting in 2026 but bullet payment 2027
no options proceeds etc in this example but see what you mean
how come the numbers don't match any of the assumptions? were the numbers given to you and you need to just fill in the yellow rows? curious what your final model/summary looks like!
these were provided
I did this as a practice and ended with 32% IRR / 4.0x MoIC. For M&A Capex I just used % of acquisition sales that equaled the sum % of maintenance and expansion capex from core revenue. Curious to see what others do, 2026 EBITDA is 386.5 + 41.0 acquired.
386.5+41 is also MS M&A VP1 all in comp last yr
?
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