What is the pe irr on this leverage buyout

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You analyze a leverage buyout. The (LTM) EBITDA of the target at the time of the buyout is $40M, and it is expected to grow at a rate of 7% in each of the next 3 years. The PE firm intends to acquire the target at an enterprise valuation that reflects an (LTM) EBITDA multiple of 7X and exit its investment 3 years later at an enterprise valuation that reflects an (LTM) EBITDA multiple of 8X. The PE firm borrows $180M at interest rate of 10% to finance the buyout; the rest of the funds will be an equity investment by the PE. The PE expects the level of debt on the target's firm balance sheet to be 3X of its (LTM) EBITDA at the time of exit. What is the PE's IRR on this leverage buyout?

Reference no: EM133112478

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