Free tool · VCI Institute
LBO Returns Calculator
Put in an entry price, a capital structure and an exit. Get MOIC, IRR and the answer most models never show you: how much of the return came from running the business, and how much came from the market.
Your deal
At entry
At exit
Currency does not matter. Use consistent units throughout, in millions or thousands, and the outputs come back in the same units.
MOIC
3.61x
on the sponsor cheque
IRR
29.3%
over 5 years
Equity proceeds
299.7
at exit
Where the value came from
| Component | Value | Share | Who controlled it |
|---|---|---|---|
| Earnings growth | The operating team | ||
| Multiple movement | The market | ||
| Deleveraging | The operating team | ||
| Gross value created | 100% |
The underlying figures
| Entry enterprise value | |
| Entry equity, before fees | |
| Sponsor cheque, including fees | |
| Exit enterprise value | |
| Exit equity proceeds | |
| Entry leverage | |
| Exit leverage | |
| MOIC measured on entry equity instead |
The last row exists because the two are routinely confused. Returns are measured on the cheque the fund actually wrote.
How the attribution works
Any leveraged return decomposes into three parts, and only two of them are yours. Written out, with the convention stated, because the convention changes the answer.
The three components
Earnings growth. The EBITDA you added, valued at the multiple you paid. Growth times entry multiple. This is the operating team's number.
Multiple movement. The change in multiple, applied to exit EBITDA. This is the market's number, informed by evidence you created but ultimately set by a buyer.
Deleveraging. Opening net debt less closing net debt. Cash that arrived and was applied. It requires nobody's agreement, which is what makes it the most reliable of the three.
The convention, stated
Earnings growth is valued at the entry multiple, and the interaction term is assigned to multiple movement. Valuing growth at the exit multiple instead moves several points of value from one column to the other without changing a single fact about the business. Both are defensible. Mixing them inside one analysis is not. State which you are using and use the same one every time.
The check that matters
Sponsor cheque, plus all three components, less fees, must equal exit equity proceeds. If it does not, one of the components is using the wrong multiple. The calculator runs that check on every result and tells you when it fails.
Cheque versus entry equity
These are different numbers and confusing them overstates the return. Entry equity is enterprise value less net debt, and it is what appears in the enterprise value bridge. The sponsor cheque adds transaction fees, and it is what the fund actually wrote. Returns are measured on the cheque.
What this does not do
This is a returns decomposition, not a full LBO model. It carries no debt schedule, no cash sweep, no covenant test and no interim cash flows, so the IRR assumes a single entry and a single exit with nothing in between. A recapitalisation, a follow on injection or a dividend will all move the real IRR away from this figure while leaving MOIC untouched. For those you need a period model.
One email with your link. Unsubscribe on the first click, any time.
The arithmetic is the easy part
Knowing the split is one thing. Knowing which of the three you can actually move, in what order, and what a buyer will accept as evidence is what the certifications teach. COPPE Level 2 builds this calculation and eight more from raw financials.