Question 1

How is LBO IRR calculated?

Accepted Answer

LBO IRR is the discount rate that makes NPV of cash flows zero: initial equity investment (negative), any dividends during hold, and exit equity proceeds. A $100M equity investment returning $300M in 5 years gives approximately 25% IRR. Our calculator handles debt paydown and EBITDA growth.

Question 2

What is carried interest?

Accepted Answer

Carried interest is the GP's share of profits above the hurdle rate, typically 20% of profits after LPs receive their preferred return (usually 8% p.a.). Most funds include a GP catchup provision where the GP receives 100% of profits until reaching 20% of total profits.

Question 3

What are DPI, RVPI, and TVPI?

Accepted Answer

DPI (Distributions to Paid-In) = cash returned / invested capital. RVPI (Residual Value to Paid-In) = remaining portfolio value / invested capital. TVPI = DPI + RVPI. A fund with 1.5x DPI and 0.8x RVPI has 2.3x TVPI. TVPI is the primary performance benchmark for LP reporting.

Question 4

Are these private equity tools free?

Accepted Answer

Yes - completely free, no sign-up required. Results export to CSV or PDF.

Free Private Equity Tools & Calculators

Private equity calculators for deal teams

Private Equity Tools - FAQ