IB Tools

LBO Returns Calculator

A paper-LBO: buy with debt, grow EBITDA, repay debt with cash flow, sell at an exit multiple, and measure the sponsor's return.

Sponsor IRR

19.6%

MOIC 2.45× over 5 years

Equity invested

₹500 Cr

Equity at exit

₹1,222.8 Cr

Exit EBITDA

₹146.9 Cr

Debt left at exit

₹246.6 Cr

EBITDA growth
469.3
Multiple change
0
Debt paydown
253.4

Formula

  • Entry EV = EBITDA × entry multiple; Equity = EV − Debt
  • Each year: EBITDA × (1+g); Debt −= EBITDA × paydown %
  • MOIC = Exit equity ÷ Entry equity; IRR = MOIC^(1/n) − 1

How it works

  1. No interim dividends or fees are assumed, so IRR comes from the two cash flows.
  2. Value creation splits into EBITDA growth, multiple change and debt paydown (bars).
  3. Real LBOs model interest, taxes and capex year by year.

Where it's used: Private-equity screening and the classic 'paper LBO' interview question.

Educational tool only. Not investment advice, not a recommendation, and not a substitute for professional valuation work.