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    Private equity / LBO

    LBO calculator

    What leverage does to returns: entry and exit multiples, the debt package, the equity cheque and the MOIC and IRR that come out. Change the exit multiple and see how much of the return is multiple expansion rather than EBITDA growth.

    Entry8.0×Leverage5.0×Exit8.0×
    MOIC
    2.18×
    Exit equity over entry equity
    IRR
    16.9%
    over 5 years
    Sponsor equity
    $316.00M
    debt $500.00M
    Exit equity
    $690.00M
    EV $1.04B
    Sources and uses
    Entry, financing and exit on the same EBITDA base.
    Sources and uses
    ItemValue
    Entry EBITDA$100.00M
    Entry enterprise value$800.00M
    Opening debt$500.00M
    Sponsor equity$316.00M
    Exit EBITDA$130.00M
    Exit enterprise value$1.04B
    Exit debt$350.00M
    Exit equity$690.00M
    MOIC2.18×
    IRR16.9%

    Returns are unlevered at the fund level: no management fees, carry or dividend recaps.

    Inspect the model
    Choose a quick result view, a scaled comparison, or the complete diagnostic set.
    IRR against exit multiple
    A one-turn multiple change is worth several points of IRR.
    IRR against exit multiple0.0006.2512.5018.7525.0031.256×6×7×7×8×8×9×9×10×10×11×11×IRR (%)
    Canonical equations
    The exact relationships implemented by this engine.

    EV = EBITDA × multiple · Equity = EV + fees − debt.

    Equity = EV_exit − net debt · After the modelled paydown.

    MOIC = equity_out/equity_in, IRR = MOIC^(1/t) − 1 · No interim distributions.

    finance methodology

    A clear path from inputs to results.

    What leverage does to returns: the entry multiple sets the price, the debt sets the equity cheque, and the exit multiple sets the answer. The gap between MOIC and IRR is the hold period.

    Step-by-step methodWorked exampleAssumptions explained

    How to use

    1. Enter entry EBITDA and the entry multiple.
    2. Set the leverage, fees and the debt paydown.
    3. Read the equity cheque, MOIC and IRR, then test the exit multiple.

    The formula

    MOIC=equityexitequityentry,IRR=MOIC1/t−1MOIC = \frac{equity_{exit}}{equity_{entry}}, \qquad IRR = MOIC^{1/t} - 1

    Reference: Single entry, single exit IRR with no interim distributions or fund fees (Brealey, Myers & Allen, Principles of Corporate Finance).

    Worked example

    $100M EBITDA at 8× with 5× debt

    Inputs
    • 2% fees, exit at 8× on $130M after 5 years, 30% paydown.
    Calculation path
    1. 1

      EV 800, debt 500, fees 16, equity 316. Exit EV 1,040, debt 350, equity 690. MOIC 2.18×, IRR 16.9%.

    Result

    2.18× and 16.9%.

    Interpreting the result

    At a constant multiple, all of the return comes from EBITDA growth and debt paydown. Multiple expansion is a bonus, not a plan.

    Assumptions & limitations

    • No management fees, carry or dividend recaps.
    • Debt paydown is an input.
    • Fees are funded by equity.
    • No interim distributions.

    Frequently asked questions

    Why is IRR higher than MOIC suggests?

    IRR annualises; a 2× over five years is 15%, over three years it is 26%.

    Does leverage always help?

    It magnifies both directions; a flat exit with high leverage destroys equity.

    What is a good LBO return?

    2.0–2.5× and 20%+ IRR is the traditional target.

    Where do fees go?

    They are added to the enterprise value and funded by the equity cheque.

    Methodology last reviewed 2026-10-22. Results are informational and not financial or engineering advice — see our disclaimer.