CVC Mock Case Study – Industrial controls LBO

At a glance

Complete a three-statement LBO with purchase accounting, PIK debt and a management payout, then assess the entry price and liquidity. You have three hours and a seven-tab template. Calculate returns across entry and exit multiples and test the price against a 20% IRR target.

The brief

You are an associate on the deal team. Wexley's founding family has agreed to sell the business to the fund at 9.5x 2025 EBITDA, with completion on 31 December 2025. The company's existing debt will be refinanced at closing with a revolving credit facility, a term loan A and mezzanine notes that pay part of their interest in kind. The fund plans to sell Wexley after five years.

Before the investment committee meets, the partner wants three answers:

1. What IRR and multiple of money does the fund make in the base case?
2. How much does management's incentive plan pay out at exit?
3. What is the highest entry multiple at which the fund still earns its 20% required return?

Behind the Exit Alpha cover sheet, the template is pre-formatted with seven tabs: Questions, S&U (sources and uses and returns), Closing BS, IS, BS, CFS and Debt. The blue cells already hold the historical figures, the operating drivers, the financing terms and the minimum cash balance. Enter the other transaction assumptions below (price, exit, costs, purchase accounting, repayment terms, the management incentive and the required return) yourself.