LBO Question - Exclude dividends from IRR?

A few of the LBO summaries I've seen don't include dividend cash flows in the IRR calculation? Doesn't sound intuitive to me. I've always heard PE shops look for 20-30% IRRs, and assumed that has to do with all CFs coming to them until exit.

I can't imagine a PE shop looking for a 20-30% IRR on a 3-5 year flip with no dividends in between.

 

A business that is spinning off loads of cash, is not depleting the asset base, maintaining/improving debt/coverage ratios and they're not paying dividends?

My questions is the IRR a company seeks to obtain is indicative of ALL cash flows associated with the investment, correct? Not just exit proceeds. Thats what I was referring to as I can't imagine a PE shop looks for 20-30% IRR, in addition to dividends.

The LBO summary I was looking at is from a 3 year old financial sponsors group deal, so I doubt they're considering current credit market conditions.

 

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