Tool 20 · the lab · Read: Ch. 18 — DCF, LBO, and venture methods

PE deal evaluation engine

Where the VC scorecard fits a Series A, this fits a buyout. Six modules — company profile, structure, PE fit, value creation, three exit scenarios, and a quality filter. Outputs a fit score, IRR/MOIC matrix, and a verdict band.

1 · Company profile

The numbers as they sit today

Company name

Sector

Geography

Revenue (LTM, $M)

EBITDA (LTM, $M)

EBITDA margin (%)

Revenue growth (% / yr)

FCF conversion (% of EBITDA)

Recurring revenue (%)

2 · Entry structure

Type of deal & capital stack

Deal type

Entry EV / EBITDA (×)

Hold period (yrs)

Debt / EBITDA at close (×)

Sponsor equity ($M)

Annual debt paydown (% of FCF)

3 · PE fit score

Quality filter — the "fewer but better" lens

Five binary checks that great PE deals share. A genuine "yes" on at least four moves the deal into priority diligence.

Recurring or contracted revenue ≥ 50% of total

Top-3 customer concentration ≤ 30%

Demonstrated pricing power (price hikes absorbed)

Defensible market position (#1 or #2 in niche)

Management willing to roll equity ≥ 25%

4 · Value creation plan

Where the EBITDA dollars come from over the hold

Total of revenue growth + margin expansion + multiple expansion = your edge. Most plans should sum to ≥30%.

Revenue growth Δ over hold (%)

EBITDA margin Δ (pp)

Exit multiple Δ vs entry (×)

5 · Exit scenarios

Bear / Base / Bull at the end of the hold

Auto-computed from the value creation plan plus a ±20% sensitivity on revenue growth and ±0.75× multiple range.