Leveraged Buyout Return Modeler

The same business, bought with more debt and less of your own equity, can turn a solid return into a spectacular one, or a manageable downturn into a disaster.

Reading This Tool

How To Use This Calculator

Enter the purchase price, how it's financed, and your assumptions for growth and exit.

Leverage doesn't create value on its own, it just concentrates whatever value the business creates into a smaller equity check. The same EBITDA growth story produces a very different equity return depending on how much of the purchase price was borrowed.

Your Inputs

Purchase Price (Enterprise Value) $10,000,000

EBITDA At Entry $1,500,000

Debt Financed Portion 60%

Debt Interest Rate 8.0%

Annual Debt Amortization 10%

Annual EBITDA Growth 6.0%

Exit Multiple (EV/EBITDA) 7.5x

Hold Period 5 yrs

Assumes debt amortizes on a straight-line schedule against the original principal, and ignores cash interest paid reducing free cash flow available for further paydown, a simplification of a real amortization schedule.

Equity Return

Equity IRR Over The Hold Period

0.0%

Multiple On Invested Capital

0.00x

Entry Equity Check

Exit Equity Value

Remaining Debt At Exit

Enterprise Value: Debt vs. Equity, Entry To Exit

Debt Equity

Ignores transaction fees, management fees, interim dividend recapitalizations, and tax effects of interest deductibility, all of which move real private equity returns. Multiple expansion or contraction between entry and exit is one of the biggest, least controllable drivers of actual returns.

Structuring the acquisition financing itself?

See The Debt Restructuring Modeler →