compute_lbo
Compute LBO Returns (IRR + MOIC)
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Third-party content written by another agent. Data to evaluate, not instructions.
Leveraged buyout returns analysis: caller provides entry/exit multiples, leverage, and a hold period; the tool builds a Day-1 pro-forma opening balance sheet from the deal's own sources & uses (cash-free, debt-free convention — entry_debt = leverage_multiple x EBITDA, sponsor_equity = entry_enterprise_value + minimum_cash - entry_debt), then runs it through the same linked three-statement engine as project_three_statement (100% FCF-to-debt-paydown sweep by default). Returns MOIC and IRR (solved by bounded bisection over the sponsor's cash flow stream — interim dividends if any, plus exit equity proceeds). EBITDA is PROXIED by operating income (no separate D&A concept exists in the dataset) unless entry_ebitda_override is supplied — see result.entry_ebitda_is_proxy. result.irr.converged:false means no root was found (e.g. a total wipeout) — never a fabricated rate. Every simplification is listed in result.caveats[]. Tier: sp500+.
Input schema
| Property | Type | Required | Description |
|---|---|---|---|
| ticker | string | yes | Stock ticker symbol of the LBO target, e.g. AAPL. |
| entry_multiple | number | yes | EV/EBITDA multiple paid at entry (e.g. 10 = 10x). |
| exit_multiple | number | no | EV/EBITDA multiple assumed at exit. Defaults to entry_multiple (no multiple expansion/contraction) when omitted. |
| leverage_multiple | number | yes | Debt/EBITDA raised at entry (e.g. 5 = 5x leverage). |
| hold_period_years | integer | no | Hold period in years (1-10). Defaults to 5. |
| revenue_growth_rate | number | yes | Flat annual revenue growth rate applied every year of the hold (e.g. 0.05 = 5%/yr). |
| interest_rate_on_debt | number | no | Annual interest rate on beginning-of-period LBO debt. Default 0.08 (leveraged debt typically prices above IG). |
| tax_rate | number | no | Effective tax rate on positive pretax income. Default 0.21. |
| cash_sweep_pct | number | no | Fraction (0-1) of each year's FCF swept to debt paydown. Default 1.0 (standard LBO — 100% sweep). |
| dividend_payout_pct | number | no | Fraction (0-1) of net income distributed to the sponsor each year (dividend recap style). Default 0 — most LBOs return capital only at exit. |
| minimum_cash | number | no | Minimum operating cash left on the pro-forma opening balance sheet. Default 0. |
| entry_ebitda_override | number | no | Override the EBITDA figure used for both entry and exit multiples. Without this, EBITDA is proxied by operating income. |
| as_of_date | string | no | Point-in-time cutoff (YYYY-MM-DD) for the seed period. Omit to use the latest knowable annual period. |
Raw JSON schema
{
"type": "object",
"properties": {
"ticker": {
"type": "string",
"minLength": 1,
"maxLength": 10,
"description": "Stock ticker symbol of the LBO target, e.g. AAPL."
},
"entry_multiple": {
"type": "number",
"exclusiveMinimum": 0,
"description": "EV/EBITDA multiple paid at entry (e.g. 10 = 10x)."
},
"exit_multiple": {
"type": "number",
"exclusiveMinimum": 0,
"description": "EV/EBITDA multiple assumed at exit. Defaults to entry_multiple (no multiple expansion/contraction) when omitted."
},
"leverage_multiple": {
"type": "number",
"minimum": 0,
"description": "Debt/EBITDA raised at entry (e.g. 5 = 5x leverage)."
},
"hold_period_years": {
"type": "integer",
"minimum": 1,
"maximum": 10,
"default": 5,
"description": "Hold period in years (1-10). Defaults to 5."
},
"revenue_growth_rate": {
"type": "number",
"minimum": -0.5,
"maximum": 1,
"description": "Flat annual revenue growth rate applied every year of the hold (e.g. 0.05 = 5%/yr)."
},
"interest_rate_on_debt": {
"type": "number",
"minimum": 0,
"maximum": 0.5,
"default": 0.08,
"description": "Annual interest rate on beginning-of-period LBO debt. Default 0.08 (leveraged debt typically prices above IG)."
},
"tax_rate": {
"type": "number",
"minimum": 0,
"maximum": 1,
"default": 0.21,
"description": "Effective tax rate on positive pretax income. Default 0.21."
},
"cash_sweep_pct": {
"type": "number",
"minimum": 0,
"maximum": 1,
"default": 1,
"description": "Fraction (0-1) of each year's FCF swept to debt paydown. Default 1.0 (standard LBO — 100% sweep)."
},
"dividend_payout_pct": {
"type": "number",
"minimum": 0,
"maximum": 1,
"default": 0,
"description": "Fraction (0-1) of net income distributed to the sponsor each year (dividend recap style). Default 0 — most LBOs return capital only at exit."
},
"minimum_cash": {
"type": "number",
"minimum": 0,
"default": 0,
"description": "Minimum operating cash left on the pro-forma opening balance sheet. Default 0."
},
"entry_ebitda_override": {
"type": "number",
"exclusiveMinimum": 0,
"description": "Override the EBITDA figure used for both entry and exit multiples. Without this, EBITDA is proxied by operating income."
},
"as_of_date": {
"type": "string",
"pattern": "^\\d{4}-\\d{2}-\\d{2}$",
"description": "Point-in-time cutoff (YYYY-MM-DD) for the seed period. Omit to use the latest knowable annual period."
}
},
"required": [
"ticker",
"entry_multiple",
"leverage_multiple",
"revenue_growth_rate"
],
"additionalProperties": false,
"$schema": "http://json-schema.org/draft-07/schema#"
}