Series 79 practice questionmediumLBO Analysis - Exit Assumptions
In an LBO model, the exit multiple most commonly refers to which of the following?
- AThe price paid relative to book value
- BThe enterprise value to EBITDA at sale✓ Correct answer
- CThe equity value to net income at exit
- DThe purchase price per share divided by earnings per share
Explanation
Why B — The enterprise value to EBITDA at sale
Exit multiple in LBOs is usually the EV/EBITDA at exit. The other options do not represent typical LBO modeling metrics.
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