With exit EBITDA of 150m and an exit multiple of 9x, and debt repaid of 250m, what are the exit equity proceeds?

With exit EBITDA of 150m and an exit multiple of 9x, and debt repaid of 250m, what are the exit equity proceeds?

• A. 1,350m
• B. 1,000m
• C. 600m
• D. 350m

Answer: (B)

The key idea here is that exit equity proceeds come from the enterprise value at exit, after paying off debt. Enterprise value is found by multiplying the exit EBITDA by the exit multiple, and equity proceeds are EV minus the debt repaid (net debt at exit). Calculate the enterprise value: 150 million times 9 equals 1,350 million. Subtract the debt repaid: 1,350 million minus 250 million equals 1,100 million. So the exit equity proceeds would be 1,100 million based on the given numbers. Notice the options don’t include 1,100 million; if the debt repaid were 350 million instead, the result would be 1,000 million, which matches the listed choice. In practice, this shows the method (EV from EBITDA and multiple, then subtract debt) and also that a mismatch in the debt amount or rounding can lead to different presented options.

The key idea here is that exit equity proceeds come from the enterprise value at exit, after paying off debt. Enterprise value is found by multiplying the exit EBITDA by the exit multiple, and equity proceeds are EV minus the debt repaid (net debt at exit).

Calculate the enterprise value: 150 million times 9 equals 1,350 million. Subtract the debt repaid: 1,350 million minus 250 million equals 1,100 million. So the exit equity proceeds would be 1,100 million based on the given numbers.

Notice the options don’t include 1,100 million; if the debt repaid were 350 million instead, the result would be 1,000 million, which matches the listed choice. In practice, this shows the method (EV from EBITDA and multiple, then subtract debt) and also that a mismatch in the debt amount or rounding can lead to different presented options.