Paper LBO drill pack: six drills and a returns toolkit

At a glance

Six Paper LBO drills covering cash flow, debt repayment, equity returns and the price required to meet an IRR target. These are the kinds of Paper LBOs PE funds use to screen candidates. Allow 10 to 15 minutes per drill and explain your working aloud; the pack includes a returns toolkit.

The brief

Work through each drill aloud or on paper, allowing 10 to 15 minutes. Calculate the equity return, explain your assumptions and compare the result with the target.

Each of the six drills stands alone. Read the question, write the facts down in a small table, work through the steps in the order set out in How to approach it, and end with a one-line answer to the question asked. All amounts are in £ millions. The fund's hurdle is a 20% IRR: use it when a drill asks whether a deal is a good investment.