Hi - would you guys know how to tackle this question?
Suppose you buy a business @8x Ebitda and believe you could sell it in 5 years @ the same 8x multiple. Your required rated of return is 20%. Assume that banks are willing to lend yp tp 4x Debt/Ebitda and that half of debt would get repaid after 5 years. How much do you need to grow EBITDA by within this timeframe?
I would say Ebitda need to grow to 4.5x by end 5th year…?