Paper LBO

Entry EBITDA is last-twelve-months revenue times the EBITDA margin. EV is that EBITDA times the entry multiple; fees are a % of EV. Debt is a multiple of entry EBITDA. Sponsor equity funds the rest of the uses.

Revenue grows at the rate entered. EBITDA, D&A and capex are % of revenue; the working capital increase is a % of the change in revenue. A single rate applies to opening debt, so there is no circularity. Tax applies to positive pre-tax profit, with no tax losses carried forward.

Free cash flow = net income + D&A − capex − working capital increase. Its positive part repays debt, up to the outstanding balance. Any surplus builds up as cash, earning no interest. There is no revolver: negative free cash flow makes cash negative and triggers an alert.

Exit EV = final-year EBITDA times the exit multiple. Exit equity = EV − net debt. MOIC = exit equity / equity invested; IRR = MOIC^(1/years) − 1, with one cash flow at entry and one at exit and no interim dividends.

The bridge splits the gain into EBITDA growth, multiple expansion, deleveraging and fees, and reconciles exactly with exit equity minus equity invested. Debt does not depend on the multiples, so each sensitivity cell is a direct formula, with no data table.