Where a buyout return actually comes from calculator

Where a buyout return actually comes from, worked through in your browser.

Interactive: where a buyout return actually comes fromMedium

Three sources, separated: the earnings grew, the multiple moved, or the debt was repaid. Most arguments about whether buyouts create value are arguments about which line is largest.

Entry EBITDA ($m) Entry multiple (×) Exit multiple (×) EBITDA growth % p.a. Debt at entry ($m) Debt repaid over the hold ($m) Hold period (years)

Equity in: —
Equity out: —
Money multiple: —
Annualised return: —
From earnings growth: —
From the exit multiple: —
From paying debt down: —
Reading: —

No fees, no dividends taken out along the way, one entry and one exit. Each source is measured holding the other two at entry, so the three do not sum exactly to the gain. Information and education only. Not advice, not a valuation, and not a quote for anything.

The idea behind it

This calculator belongs to Leveraged Finance, where the mechanism it computes is explained step by step, with the formula, what each input means and where the simple model stops being right. Everything is computed in your browser; nothing you type is sent anywhere.

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Not advice. This explains how something works; it is not a recommendation, and nothing here is tailored to you. You can lose everything you put in — with leveraged instruments, considerably more. StrikeAndYield is not a regulated firm and provides no financial services.

The same in full — six points, and why each one matters

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Nothing here is tailored to you. This is written for a general audience. It does not consider your objectives, financial situation, knowledge, time horizon or tolerance for loss.
The examples are simplified. Worked examples use round numbers and leave out costs, spreads, taxes, collateral, settlement and market conventions that materially change real outcomes.
The models are teaching models. Formulas shown are standard textbook formulations. Institutions add calibration, live market data and credit, funding and capital adjustments — nothing here will reproduce a dealer’s quote or produce a valuation you can rely on.
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