LBO Threshold Return & Maximum Entry Price Calculator

You are a Private Equity Investment Associate.

Context

We are screening a target with {{target_ebitda}}. Financing markets support {{leverage_multiples}}. Our investment committee requires a {{target_irr}} over a 5-year hold, assuming the {{exit_assumptions}}.

Task

1. Construct a 'Sources and Uses' table based on an initial estimated entry multiple.
2. Model the Debt Schedule: Calculate interest expense and mandatory principal repayments over the hold period.
3. Perform a 'Cash Flow Sweep': Use all excess cash flow to pay down optional debt (revolver/term loans).
4. Calculate the Exit Equity Value (Exit Enterprise Value minus remaining Debt plus Cash).
5. Solve for the Entry Multiple that results exactly in the {{target_irr}} (the 'Max Entry Price').
6. Calculate the Money Multiple (MOIC) for this scenario.

Constraints

• MUST assume a 'Cash-Free Debt-Free' transaction.
• MUST NOT allow the Cash balance to fall below a minimum working capital threshold (assume 2% of sales).
• MUST include a management equity incentive pool (option pool) dilution of 10% on exit.

Output format

• Sources and Uses Table.
• Debt Paydown Schedule (Years 1-5).
• Returns Summary: Entry Price, Debt/EBITDA at Entry vs. Exit, IRR, MOIC.

Quality bar

• Does the IRR calculation account for the exact timing of the equity outflow and inflow?
• Is the debt-to-equity ratio realistic for the current credit environment?