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What if the exit multiple derates?
What a derated exit multiple does to IRR and MOIC - and the multiple the case needs to clear the hurdle.
Your numbers
Starting numbers: A leveraged buyout of a mid-market business, tested against a lower multiple on the way out than on the way in. Change anything below.
What a buyer pays, as a multiple of annual earnings.
Operating profit before financing and accounting charges, in the year you sell.
How long you own the business before selling.
How much of the borrowing is cleared over the hold.
Operating profit in the year you buy.
What you pay, as a multiple of annual earnings.
Borrowing used to fund the purchase, net of cash.
What this also assumes (1)
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Annual return
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How it's computed
About this calculator
A buyout returns money from three engines: EBITDA growth, debt paydown, and the exit multiple. The first two are earned; the third is the market's mood on the day you sell. This model prices the mood swing. Equity in is enterprise value at entry less the debt raised against it; equity out is exit EBITDA times the exit multiple, less whatever debt remains. MOIC is money out over money in, IRR annualises it over the hold, and the headroom line judges the result against the fund's hurdle. The last output turns the question around: the exit multiple this case needs just to clear the bar.
Pull the levers to derate the exit, stretch the hold, or lean harder on EBITDA growth and paydown, and watch which engine actually carries the return. Then save the model with your own deal's numbers to build downside cases and share them with the team.
Every number on this page is computed live by the LeverMap engine.