Free calculator · Private equity
Calculate a leveraged buyout (LBO): IRR, MOIC & covenants
Sources & uses, annual debt schedule with cash sweep, covenant test and exit returns (IRR/MOIC), live as you type. No sign-up, and no data is sent to my server.
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Enter EBITDA in €m (e.g. 5 = €5m), multiples in ×, assumptions in %. * = required field.
Entry
Financing
Operations & assumptions
Exit & covenants
Deal holds
MOIC
2.76×IRR
22.5%Sources & uses
Exit (year 5)
Covenants (worst year)
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Net debt
Deleveraging over the holding period. Red = covenant breach.
Sensitivity: IRR
IRR across exit multiple × EBITDA growth. Outlined = current assumption.
| Growth ↓ / Exit × | 6.0× | 7.0× | 8.0× | 9.0× | 10.0× |
|---|---|---|---|---|---|
| 15% | 22% | 26% | 30% | 33% | 36% |
| 10% | 15% | 19% | 23% | 26% | 29% |
| 5% | 7% | 11% | 15% | 18% | 21% |
| 0% | -2% | 3% | 7% | 10% | 13% |
Debt schedule
| Year | EBITDA | EBIT | Interest | Taxes | FCF | Repayment | Net debt | Leverage | Cover |
|---|---|---|---|---|---|---|---|---|---|
| 1 | €5.5m | €4.8m | €1.6m | €972k | €3.3m | €1.7m | €18.3m | 3.3× | 3.4× |
| 2 | €6.1m | €5.3m | €1.5m | €1.2m | €3.6m | €2.1m | €16.2m | 2.7× | 4.1× |
| 3 | €6.7m | €5.9m | €1.3m | €1.4m | €3.8m | €2.5m | €13.6m | 2.0× | 5.1× |
| 4 | €7.3m | €6.4m | €1.1m | €1.6m | €4.1m | €3m | €10.6m | 1.4× | 6.7× |
| 5 | €8.1m | €7.1m | €847.5k | €1.9m | €4.4m | €3.6m | €7m | 0.9× | 9.5× |
How the leveraged buyout calculator works
The purchase price (enterprise value) is EBITDA times the entry multiple. Part of it is financed with debt, and the buyer's equity covers the rest:
Equity = (EBITDA × entry multiple + transaction costs) − debt
Each year the company generates free cash flow (EBITDA less capex, taxes and the investment in working capital). This pays the interest, the mandatory amortisation and, through the cash sweep, additional voluntary repayments. Debt falls year by year (deleveraging). At exit:
Exit equity = exit EBITDA × exit multiple − net financial debt
Equity invested and exit equity give the two key return metrics:
MOIC = exit equity / equity · IRR = MOIC^(1/years) − 1
Worked example
A company with €5m EBITDA is bought at 8× (enterprise value €40m) and financed with 4× leverage (€20m of debt). After 2% transaction costs the buyer invests around €20.8m of equity. With 10% EBITDA growth, a full cash sweep and an exit at 8× after 5 years, exit equity is around €57m. That is roughly 2.8× MOIC and just over 22% IRR. Change the assumptions above and see at which exit multiple or growth rate the deal misses the return hurdle.
Model logic and simplifications
The model calculates cleanly: EBIT = EBITDA − depreciation and amortisation (D&A), taxes on EBIT − interest, free cash flow = EBITDA − capex − investment in working capital − taxes. Liquidity shortfalls are drawn on a revolver (no hidden negative cash), and the leverage covenant is tested on net debt / EBITDA. Deliberate simplifications: no separate revenue line (capex, D&A and working capital as percentages), interest on the opening balance and a single exit cash flow with no interim dividends. That is enough for a quick, robust first screening of a deal; the full three-statement model follows in the detailed phase.
Looking for suitable targets?
I source owner-managed Mittelstand companies in the DACH region on a proprietary basis as acquisition targets for private equity and family offices, systematically and discreetly.
For investorsFurther reading
- Calculate company value: the entry price as the starting point of every LBO
- EBITDA multiples DACH: realistic entry and exit multiples by sector
- Due diligence: what is examined before the purchase
- Glossary: LBO, IRR, MOIC, covenant and more explained
Note
This calculator is for non-binding guidance only and does not constitute financial, tax or legal advice. The results are based on a simplified screening model with generic assumptions and do not replace a full financial model or professional transaction advice. I accept no liability for accuracy, completeness or timeliness.
Frequently asked questions
What is an LBO (leveraged buyout)?
A leveraged buyout is the acquisition of a company that is financed mainly with debt. The buyer (usually a private equity fund) contributes only part of the price as equity; the rest is financed with debt that the acquired company repays from its cash flow. The equity return comes from three levers: debt paydown (deleveraging), EBITDA growth and a change in the valuation multiple between entry and exit.
How are IRR and MOIC calculated?
MOIC (multiple on invested capital) is the ratio of exit equity to equity invested. Example: €50m of exit equity on €20m invested gives a MOIC of 2.5×. The IRR (internal rate of return) annualises this return over the holding period: with a single entry and a single exit cash flow, IRR = MOIC^(1/years) − 1. 2.5× over 5 years is roughly 20% IRR.
How much leverage is usual in an LBO?
In the DACH lower mid-market, entry leverage is typically 3-5× EBITDA, depending on cash flow stability, sector and interest rates. Higher leverage increases the equity return but also the risk of a covenant breach. The calculator shows leverage (net debt / EBITDA) and interest cover (EBITDA / interest) for each year and flags covenant breaches.
What is a covenant breach?
Covenants are contractual conditions set by the lenders, usually a maximum leverage (e.g. 6× EBITDA) and a minimum interest cover (e.g. 2×). If either limit is breached, there is a covenant breach: the bank can renegotiate or call the loan. A deal that looks attractive on paper can fail on this in practice, even if IRR and MOIC are fine.
Is the LBO calculator free and confidential?
Yes. The calculation runs entirely in your browser and no inputs are sent to a server. You can enter real deal figures without them leaving the page. The calculator can be used without registration and without giving an email address.