Bill Canady walks through a PE deal model with five inputs: entry EBITDA, entry multiple, debt, target MOIC, and hold period. A $50M EBITDA company bought at 10× leverage ($500M EV, $250M debt) needs to grow EBITDA 50% and cut debt in half to hit a 2.5× MOIC in five years.
5 inputs: entry EBITDA, entry multiple, debt at close, target MOIC, hold period. Let me run it because the arithmetic matters more than the explanation. Company was doing $50 million of EBITDA when the sponsor bought it at a 10x multiple. $500 million of enterprise value, $250 million debt at close, 5 terms, completely normal. So the equity in the deal is $250 million. At 2.5x MOIC over 5 years, that equity has to become $625 million. Over 5 years, you'll pay the debt down, say from $250 to about $125. Required enterprise value at this point is $625 of equity plus $125 of remaining debt, $750 million. Divide by a 10 multiple. Now they bought it at $50. Your number is $75 and $25 million build, 50% growth.
