Module VI· LBO Model MechanicsAdvanced
Question

How do you structure returns disaggregation: EBITDA growth, multiple expansion, and debt paydown?

Answer

Returns disaggregation explains MOIC drivers. Break equity value creation into EBITDA growth, margin expansion, multiple change, debt paydown / cash generation, dividends / recap, and fees. This shows whether returns come from operational improvement or financial engineering. Sponsors prefer a credible operating story rather than relying on multiple expansion.