LBO model help

CFA General
#1

I am very new to financial modeling. I am trying to build a LBO model for a small private company.

I have a valuation (purchase price) of 10MM and EV/EBITDA of 13X and IRR of 24%. I am told that the purchase price should be between 17 - 20MM. When I use 17MM as the purchase price the EV/EBIDTA jumps to 21X.

are there adjustment that I can make in the model to lower this EV/EBIDTA with the 17MM as purchase price instead of 10MM. It feels weird adjusting the inputs to fit the preconceived outputs.

Thanks,

#2

bro, these numbers dont make any sense for an LBO model. what private equity shop would pay 13x multiple for a company with

#3

Hi Mobius, Thanks for the comment. The assumptions are from the management. I guess, I should lower the growth estimates for revenue to lower the EBITDA multiples.

#4

Or use an appropriate discount rate.

#5

Hi Chad Pajji, I think the discount rate is in line. thanks,