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LBO: Where does value creation come from?
A PE deal generated a 3.2x MOIC. But where exactly does the performance come from? Break it down.
PE / LBOAdvancedCalculation
Your fund completed an LBO 5 years ago on **HealthTech**. Here is the entry and exit data:
**Entry (Year 0):**
- EBITDA: €40M
- Entry multiple: 8x → EV = €320M
- Debt: €200M → Equity = €120M
**Exit (Year 5):**
- EBITDA: €60M (organic growth)
- Exit multiple: 10x → EV = €600M
- Remaining debt: €100M (repayments)
**Key question: break down the sources of value creation.**
Given
| Entry EBITDA | 40 M€ |
| Exit EBITDA | 60 M€ |
| Entry multiple | 8 x |
| Exit multiple | 10 x |
| Entry debt | 200 M€ |
| Exit debt | 100 M€ |
| Equity invested | 120 M€ |
Question 1/4
What is the MOIC?
x
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