What is the entry value

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Assume that PE firm Omega is purchasing Company Alpha at the end of 2021. Purchase multiple is 10X LTM EBITDA. Company Alpha has $200mm of revenues in 2021, expected to grow $25mm annually for the next 3 years. Alpha has an EBITDA margin of 50%, which will remain unchanged. The initial leverage of 5X EBITDA will be taken at the time of the deal. $75mm of debt will be paid down before the exit. There is no multiple expansion at the exit.

What is the entry value? Prepare the sources and uses of capital table for the LBO.

What is the value of Company Alpha at exit (year 3)?

What is the value of sponsor's equity at exit?

What is the cash-on-cash return for the sponsors?

Reference no: EM133112096

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