Calculate Entry EV and Equity Check
Calculate enterprise value and sponsor equity check from EBITDA, entry multiple, debt, and cash.
before-after walkthrough-steps Target has $30 million LTM EBITDA. The sponsor bids 8.0x EBITDA. Lenders offer $70 million debt. The company has $10 million cash that stays with the business. Entry EV = EBITDA x entry multiple; sponsor equity check = enterprise value minus debt financing, adjusted for cash and transaction uses. The common mistake is treating the headline purchase price, enterprise value, and sponsor equity check as the same number. That hides how much of the operating business is financed by debt versus sponsor capital. Step 1 $30 million EBITDA x 8.0x entry multiple = $240 million enterprise value. The…
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