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LBO Calculator

Full leveraged buyout model in your browser. Project EBITDA, model debt paydown, and see IRR + MOIC with a sensitivity heatmap.

Equity IRR

26.2%

Equity MOIC

3.20x

over 5 years

Purchase price

$160,000,000

$96,000,000 debt

Sponsor equity in

$64,000,000

Exit enterprise value

$249,785,773

Exit equity

$204,573,872

$45,211,901 debt remaining

Annual debt paydown schedule

YearEBITDAInterestTaxesCapEx + WCFCFPaydownEnding debt
Y1$21,600,000$8,160,000$3,360,000$3,240,000$6,840,000$6,840,000$89,160,000
Y2$23,328,000$7,578,600$3,937,350$3,499,200$8,312,850$8,312,850$80,847,150
Y3$25,194,240$6,872,008$4,580,558$3,779,136$9,962,538$9,962,538$70,884,612
Y4$27,209,779$6,025,192$5,296,147$4,081,467$11,806,974$11,806,974$59,077,638
Y5$29,386,562$5,021,599$6,091,241$4,407,984$13,865,737$13,865,737$45,211,901

IRR sensitivity — entry multiple × exit multiple

Entry ↓ / Exit →7.5x8.0x8.5x9.0x9.5x
7.0x27.9%29.8%31.6%33.3%34.9%
7.5x25.0%27.0%28.8%30.5%32.2%
8.0x22.3%24.3%26.2%27.9%29.6%
8.5x19.7%21.7%23.6%25.4%27.1%
9.0x17.1%19.2%21.2%23.0%24.8%
100% private

Your numbers never leave your browser. Tentt has no backend, no database, and no record of anything you type into this calculator — the math runs entirely on your device. Output is for illustrative modelling only and does not constitute investment, tax, legal, or accounting advice; verify any number you intend to act on.

What is an LBO model?

An LBO model is the central financial exercise of every private equity buyout deal. It answers a single question: if a sponsor pays a given price for a company, finances it with a given amount of debt, and operates it for a given number of years, what return will the equity earn? The five inputs that drive every LBO model are entry multiple, leverage, EBITDA growth, exit multiple, and hold period. Every other line in a real LBO model — the full debt schedule, the working capital build, the management equity, the dividend recapitalisation mechanics — is a refinement on those five core numbers.

Despite how central LBO modelling is to the entire PE industry, the free interactive web tools for it are almost non-existent. Wall Street Prep gates its Excel templates behind email signups. Breaking Into Wall Street sells a $497 LBO modelling course. Macabacus builds Excel add-ins that cost $300 a year. The general-purpose calculator sites (OmniCalculator, Calculator.net) do not have an LBO calculator at all. This page is the first comprehensive free LBO calculator on the web, with three features that competitive Excel templates rarely have together: a full debt paydown schedule, a closed-form IRR, and a 2D sensitivity heatmap on entry multiple × exit multiple.

The five core LBO inputs

An LBO model can be reduced to five inputs that drive almost all of the variance in the output:

Entry multiple — what the sponsor pays for each dollar of EBITDA. Middle-market deals run 6.5x to 9.0x; software platforms can go above 12x; cyclical industrials can go below 6x. The entry multiple is the single largest input to deal returns because it sets both the absolute purchase price and the implied future expectations baked into that price.

Leverage — total debt as a percentage of purchase price. Typical range is 50% to 65%. Higher leverage amplifies equity returns when the deal works and amplifies losses when it does not. Most institutional LBOs land between 5.0x and 6.5x debt to EBITDA, with a 6.0x soft cap from the Fed's leveraged lending guidance.

EBITDA growth — the annual rate at which EBITDA grows over the hold period. Top-quartile PE deals deliver 8% to 12% organic EBITDA CAGRs. Bottom-quartile deals deliver 0% to 3%, which usually produces sub-15% IRRs even with a clean debt-paydown story.

Exit multiple — what the next buyer pays. Most LBO models assume exit at the entry multiple (no multiple expansion), but real deal performance splits roughly 50/50 between deals that exit higher and deals that exit lower than entry. The sensitivity table on this calculator lets you see exactly how much multiple compression a deal can absorb before returns break.

Hold period — usually four to six years for institutional buyout funds, three to five years for growth equity, and two to three years for situations where the sponsor sees a fast multiple-arbitrage opportunity. Longer holds dilute IRR even if MOIC is attractive.

The LBO returns formula

The simplified equity-return formula every PE associate memorises:

Equity at exit

Exit Equity = (Exit EBITDA × Exit Multiple) − Remaining Debt

MOIC

MOIC = Exit Equity / Entry Equity

IRR (single invest-and-exit shape)

IRR = (Exit Equity / Entry Equity) ^ (1 / Hold Years) − 1

Worked example

Worked example

A sponsor acquires a business services company at 8.0x entry multiple on $20M of EBITDA — a $160M purchase price. They finance it with 60% leverage, putting in $64M of equity and $96M of debt at an 8.5% blended rate.

Over a five-year hold, EBITDA grows at 8% per year to $29.4M. The company sweeps roughly $40M of cumulative free cash flow against the debt, reducing it to about $56M at exit.

The sponsor sells at a flat 8.0x exit multiple — no multiple expansion — for an enterprise value of $235M. Net of remaining debt, the equity exits at ~$179M.

MOIC = $179M / $64M ≈ 2.8x. IRR = (2.8) ^ (1/5) − 1 ≈ 22.9% — well above the 20% LP hurdle, even with no multiple expansion.

Reading the sensitivity table

The bottom-half of the calculator is a 5×5 sensitivity heatmap on entry multiple × exit multiple, with every other input held constant. This is the single most useful exhibit in any LBO model because it shows you how much room for error the deal has on the two variables sponsors control least. Cells coloured green produce IRRs above 25% — the comfortable target zone. Yellow cells are 15% to 25% — marginal. Red cells are below 15% — a hard pass for almost every institutional fund.

The base-case cell (highlighted with a black border) is the deal as you have configured it. Reading off the diagonal tells you the deal's "multiple compression tolerance" — how many turns of compression you can absorb before returns break. A robust deal will tolerate one to two turns; a fragile deal breaks at half a turn.

For complementary perspectives on the same deal, model the sponsor returns at the deal level using the MOIC calculator, then layer on fund-level economics with the fund fee calculator and waterfall distribution calculator. For unlevered intrinsic value as a sanity check on the entry multiple, use the DCF calculator.

Frequently asked questions

What is an LBO?
A leveraged buyout is the acquisition of a company financed primarily with debt secured against the cash flows of the target itself. The acquirer — usually a private equity sponsor — puts in a relatively small slice of equity (typically 30% to 45% of the purchase price) and borrows the rest from banks, direct lenders, and the high-yield bond market. The acquired company services that debt out of its own EBITDA over the hold period, and the equity sponsor captures the value created by debt paydown plus any EBITDA growth and multiple expansion at exit.
How does an LBO calculator work?
It models five things in sequence: (1) the purchase price as entry multiple times entry EBITDA, (2) the capital structure split between sponsor equity and debt, (3) annual EBITDA growth and free cash flow over the hold period, (4) annual debt paydown out of free cash flow, and (5) the exit equity value as exit multiple times exit EBITDA minus remaining debt. From those inputs it derives the equity IRR and MOIC for the sponsor — the two numbers that decide whether the deal clears the fund's hurdle.
What is a paper LBO?
A paper LBO is the back-of-envelope version of an LBO model that PE associates and analysts are expected to be able to do in three to five minutes during a case interview, with no spreadsheet. It uses the same five-step structure but with simplified inputs: a single growth rate, a constant interest rate, no working capital adjustments, and a closed-form IRR calculation rather than a Newton-Raphson solve. The calculator above is a paper LBO with one improvement — it generates the entry × exit multiple sensitivity table that interviewers love to ask about.
What is a good IRR for an LBO?
Top-quartile middle-market buyout funds target a gross deal-level IRR of 25% to 30% and a net fund-level IRR of 18% to 22% after fees and carry. A 20% gross IRR is the absolute floor for most institutional LPs — anything below that and the fund will not raise its next vehicle. The IRR sensitivity table on this calculator lets you see exactly which combinations of entry multiple and exit multiple produce returns above the 20% threshold under your assumed leverage and growth case.
How much leverage is typical?
Middle-market LBOs typically use 50% to 65% debt as a percentage of purchase price, with the most common structure being 55% to 60%. Deals on companies with very stable recurring revenue (software, business services, healthcare services) can push leverage higher — 70% is achievable on a true software roll-up — while deals on more cyclical businesses (industrials, consumer discretionary, energy) cap at 50% to 55%. Total debt as a multiple of EBITDA — known as the leverage multiple — usually lands between 4.5x and 6.5x in the current market, with a hard regulatory cap of 6x for banks under the Fed's leveraged lending guidance.
How is IRR different from MOIC?
MOIC is a simple multiplier: how many times did you get your money back. IRR is the annualised rate of return. A 2.5x MOIC over five years implies roughly a 20% IRR; the same 2.5x MOIC over ten years implies only about 9.6%. PE funds report both because LPs care about both — MOIC tells you the absolute value created, IRR tells you the speed. Use the LBO calculator alongside the dedicated MOIC calculator to see how the two metrics interact under different hold-period assumptions.

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