PE Max Purchase Price Calculator

How much can a PE buyer pay and still hit their return target?

Deal Inputs

Current annual EBITDA of the business.

Expected EBITDA growth rate.

LMM typical: 2-3x.

Lower middle market PE

All-in cost of debt. Current market: ~8.5% for quality credits.

Fixed Assumptions

Hold period 5 years
EBITDA for debt service 50%

Deal Structure

Layer structure on top of cash at close.

Pays only if targets are hit.

Seller co-invests with buyer.

Max Cash at Close

$14.4M

4.6x entry multiple

Sources of Capital

Debt $6.2M
Equity required $8.2M

5-Year Projection

Year 0 EBITDA $3.1M
Year 5 EBITDA $5.0M
Exit multiple (from Yr5 bracket) 6.0x

$3-5M EBITDA bracket (5-7x)

Exit value $25.0M
Remaining debt at exit $0
Equity proceeds at exit $25.0M

Return Check

MOIC target (from IRR) 3.05x
MOIC achieved 3.05x
3.1x