LBO Returns Analysis: Measuring IRR and MOIC

This video explains how to measure returns in an LBO model using both the Internal Rate of Return (IRR) and Multiple of Invested Capital (MOIC).

The primary output that we are targeting through the construction of this Excel worksheet is expected return on investment, which is critical to understand in any process, since it is the ultimate measure of investment success. Expected rate of return is generally measured as both an internal rate of return (IRR) and multiple of invested capital (MOIC) under a variety of scenarios.

To develop the framework required to measure potential returns for this investment, we need to do three things:
(1) Calculate Enterprise Value
(2) Calculate the Value of Common Equity
(3) Determine the Implied Internal Rate of Return (IRR) and Multiple of Invested Capital (MOIC)

LBO Case Study Referenced in the Video:
https://www.asimplemodel.com/model/83/leveraged-buyout-model/lbo-case-study-babyburgers-llc/

LBO Case Study Solution (subscriber content):
https://www.asimplemodel.com/curriculum/9/lbo-case-study-solution/

What is the Internal Rate of Return (IRR)?
https://youtu.be/pBxhFrS09uw

Introduction to Private Equity:
https://www.asimplemodel.com/model/88/introduction-to-private-equity/how-private-equity-works/

MORE ASM PRIVATE EQUITY CONTENT ON YOUTUBE

An Introduction to Private Equity:
https://youtube.com/playlist?list=PLEbINPhfNRRTkGH36r0beJBTp8yvHUMCD

Private Equity Industry Due Diligence (Real Example)
https://youtu.be/XNvtOaXP0Ko

Private Equity Bidding Strategy
https://youtu.be/xtVgjt_raLA

Private Equity Sourcing Funnel
https://youtu.be/QeT7auI84s8

Favorite LOI Negotiation Story
https://youtu.be/mADDz83tbN0

The Working Capital Adjustment Explained
https://youtu.be/93rbSOcR7Qw

The Stock Purchase Agreement
https://youtu.be/sIA6EnxOo9A

Purchase Price in Private Equity
https://youtu.be/tmBvWZZPWUw

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Видео LBO Returns Analysis: Measuring IRR and MOIC канала A Simple Model