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InterviewSolution
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How Do You Pick Purchase Multiples And Exit Multiples In An Lbo Model? |
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Answer» The same way you do it anywhere ELSE: you look at what COMPARABLE companies are trading at, and what multiples similar LBO transactions have had. As always, you ALSO show a range of purchase and exit multiples using sensitivity tables. SOMETIMES you set purchase and exit multiples based on a specific IRR target that you're trying to achieve - but this is just for VALUATION purposes if you're using an LBO model to value the company. The same way you do it anywhere else: you look at what comparable companies are trading at, and what multiples similar LBO transactions have had. As always, you also show a range of purchase and exit multiples using sensitivity tables. Sometimes you set purchase and exit multiples based on a specific IRR target that you're trying to achieve - but this is just for valuation purposes if you're using an LBO model to value the company. |
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