(7] A PE fund is investing $120M in a target that expects to require no further capital injection throughout the investm

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7 A Pe Fund Is Investing 120m In A Target That Expects To Require No Further Capital Injection Throughout The Investm 1 (28.55 KiB) Viewed 32 times

(7] A PE fund is investing $120M in a target that expects to require no further capital injection throughout the investment horizon of 5 years. In year 5, the acquired company is expected to have net earnings (EBITDA) of $58M and the PERS at the time will remain at 7. If the PE fund requires a risk-adjusted 25% projected IRR for this investment, what percentage of the company the fund has to own at the time of the acquisition? If at the time of the acquisition, the fund had a leverage multiple of 3x. How much of the acquisition price was raised from debts? (Please ignore the effects of fees, interests and other payments in the calculation.)