LBO Returns Calculator

What is an LBO?

A leveraged buyout (LBO) is an acquisition of a company financed primarily with debt — typically 50–70% of the purchase price — with the remainder funded by private equity. The target company's own assets and cash flows serve as collateral for the borrowing.

How to Use This Free LBO Returns Calculator?

This free LBO calculator models the core mechanics of a leveraged buyout and lets you stress-test returns across any deal scenario.

What Is a Leveraged Buyout (LBO)?

A leveraged buyout is the acquisition of a company using a significant amount of borrowed capital — typically 50–70% of the purchase price — to fund the deal. The acquired company's cash flows are used to service the debt over the holding period, usually 3–7 years, before the private equity sponsor exits via a sale or IPO.

What Is IRR in Private Equity?

Internal Rate of Return (IRR) is the primary return metric used in private equity. It measures the annualized rate of return on invested equity capital over the holding period. IRR accounts for the time value of money — meaning a faster return to equity is worth more than the same dollar return achieved more slowly.

How to Use This LBO Calculator?

Entry EBITDA is the company's trailing twelve-month EBITDA (earnings before interest, taxes, depreciation, and amortization) at acquisition close — the baseline from which all growth is measured. Use the most recent audited or management-adjusted LTM figure. Entry EV/EBITDA Multiple is the total enterprise value paid divided by entry EBITDA.