LBO questions
Hello,
I would immediatly use your help for answering some questions about LBO. I would like to thank you in advance for answering to my doubt.
My questions are:
1) If the entry and exit multiple are the same, what entry multiple needs to be applied in order to generate an IRR of 30%?
1a). What is the effect on the IRR, if unsecured debt cannot be obtained?
1b). If revenue growth would be 0% in 2014 and throughout the investment term Capex would be 15% of sales and debtors (accounts payable) would increase by 10 day, would you recommend the investment to a PE fund requiring a minimum IRR of 20%? (keep the multiples applied for the IRR 30%)
2). What impact on the financial situation does the mezzanine financing have, if it would only be provided at
2a). an annual interest rate of 8%?
2b). the PIK would be at 8% annually?
Would either of the changes have an impact on the deal?
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