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LBO: Should you finance this deal?
Analyze a realistic LBO case. Warning: not all data is directly usable.
PE / LBOIntermediateCalculation
Your PE fund is evaluating the acquisition of **MécaPro**, an automotive subcontractor.
The seller presents an EBITDA of €35M, but you identify €5M of exceptional restructuring costs that inflated EBITDA this year. Management estimates that a normalized EBITDA of **€30M** is more representative.
Banks offer leverage of **4.5x normalized EBITDA** at a rate of 5.5%. The seller is asking for a multiple of **7x normalized EBITDA**.
The fund targets a **minimum IRR of 20%** over 5 years.
Given
| Presented EBITDA | 35 M€ |
| Exceptional costs included | 5 M€ |
| Proposed leverage (x norm. EBITDA) | 4.5 x |
| Asking multiple (x norm. EBITDA) | 7 x |
| Debt rate | 5.5 % |
Question 1/3
Which EBITDA should you use to structure the deal? (trap: it's NOT €35M)
M€
0/3