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60-Minute Live Mini-LBOTimed attempt

Walkthrough · Lesson 4 of 5

Explain the sponsor return

Show the exit bridge and isolate changes that the sponsor can control.

Working files

The five-year sweep reconciles.

Use only final interest-bearing debt and retained cash in the exit bridge.

Build the live model

  1. Price and allocate the exit

    Apply 8.25x to FY2030 EBITDA of $22.2424m. Deduct $15.3651m in remaining subordinated debt and add the zero cash balance.

    Base case

    Sponsor exit in the Port Alder solved workbook.
    Model Exercise!I70:P80Open full size · Sponsor exit in the Port Alder solved workbook.

  2. Separate cash multiple and annualized return

    Divide sponsor proceeds by the original $63.74m. The hold is five years without interim distributions, so annualize by raising that multiple to the one-fifth power before subtracting one.

    MOIC = 2.637815x; five-year annualized IRR = 21.4084%.

  3. Evaluate the buyer’s return

    Compare the modeled IRR to your stated hurdle and explain what the cash sweep, price or operating risk would change. Address all three questions in your workbook.

  4. Check the investor actually funds the price

    If opening sponsor equity is zero or negative, explain which financing assumption has to change. With positive equity and a funded business, an exit with no proceeds is a 0.00× multiple and a 100% loss. A funding gap or no investor check gives N/M instead.

    Source Solved Model Exercise!E24:E27 and K77:K81. Timed-layout reference!E26:E29 and K80:K84.

Check the model and defense

Calculated proceeds and a short verbal investment defense.

  • Reference result · Model Exercise!I70:P80, five-year hold. Sponsor IRR on a 2.638× cash multiple
    21.41%

    Exit proceeds of $168.134m divided by $63.740m opening equity give 2.638×. Annualizing that multiple over five years gives 21.41%.

  • Judgment check · Conversation Verbal defense

    Credit a reasoned operating lever if the cash and debt impacts are directionally correct.

Figures are rounded for display. Check your formulas at full precision. Displayed totals may differ slightly.
If your result differs
A candidate takes credit for multiple expansion in the base.

Use the fixed exit multiple and isolate organic operating growth and deleveraging.