Returns Analysis

by anthropics574ed3624aebNo license39K starsListed Oct 8, 2026Updated Oct 8, 2026Repository updated 2 weeks ago

Build quick IRR/MOIC sensitivity tables for PE deal evaluation. Models returns across entry multiple, leverage, exit multiple, growth, and hold period scenarios. Use when sizing up a deal, stress-testing assumptions, or preparing IC returns exhibits. Triggers on "returns analysis", "IRR sensitivity", "MOIC table", "what's the return at", "model the returns", or "back of the envelope".

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AI-generated overview

Builds quick IRR and MOIC sensitivity tables and scenarios for private equity deal evaluation.

What it does
Guides the user through gathering deal inputs such as entry EBITDA and multiple, leverage, operating assumptions, and exit assumptions. It then lays out base case returns with a waterfall attribution across EBITDA growth, multiple change, debt paydown, and fee drag. It builds two-way sensitivity matrices (entry vs. exit multiple, growth vs. exit multiple, leverage vs. exit multiple, hold period vs. exit multiple) showing IRR and MOIC, plus bull/base/bear scenarios. Output is an Excel workbook with assumptions, returns, sensitivity, and scenario tabs, plus a one-page returns summary for an IC deck.
When to use it
Use when sizing up a private equity deal, stress-testing return assumptions, or preparing investment committee returns exhibits. Also suited to quick back-of-the-envelope questions about the return at a given entry or exit multiple. Triggers include returns analysis, IRR sensitivity, MOIC table, and model the returns.
Requirements
No scripts; instructions only. Produces an Excel workbook and a one-page summary, so a spreadsheet tool or file-generation capability is needed. Deal inputs (entry EBITDA and multiple, net debt, equity check, fees, debt terms, growth, capex, working capital, hold period, exit multiple) must be supplied by the user.

Returns Analysis

Workflow

Step 1: Gather Deal Inputs

Ask for (or extract from prior analysis):

Entry:

  • Entry EBITDA (LTM or NTM)
  • Entry multiple (EV / EBITDA)
  • Enterprise value
  • Net debt at close
  • Equity check size
  • Transaction fees & expenses

Financing:

  • Senior debt (x EBITDA, rate, amortization)
  • Subordinated debt / mezzanine (if any)
  • Total leverage at entry (x EBITDA)
  • Equity contribution

Operating Assumptions:

  • Revenue growth rate (annual)
  • EBITDA margin trajectory
  • Capex as % of revenue
  • Working capital changes
  • Debt paydown schedule

Exit:

  • Hold period (years)
  • Exit multiple (EV / EBITDA)
  • Exit EBITDA (calculated from growth assumptions)

Step 2: Base Case Returns

Calculate:

MetricValue
Entry EV
Equity invested
Exit EBITDA
Exit EV
Net debt at exit
Exit equity value
MOIC
IRR
Cash-on-cash

Show the returns waterfall:

  • EBITDA growth contribution
  • Multiple expansion/contraction contribution
  • Debt paydown contribution
  • Fee/expense drag

Step 3: Sensitivity Tables

Build 2-way sensitivity matrices:

Entry Multiple vs. Exit Multiple

Exit 6xExit 7xExit 8xExit 9xExit 10x
Entry 7x
Entry 8x
Entry 9x
Entry 10x

EBITDA Growth vs. Exit Multiple (at fixed entry)

Leverage vs. Exit Multiple (at fixed entry and growth)

Hold Period vs. Exit Multiple

Show both IRR and MOIC in each cell (IRR / MOIC format).

Step 4: Scenario Analysis

Build 3 scenarios:

BullBaseBear
Revenue CAGR
Exit EBITDA margin
Exit multiple
Exit EBITDA
MOIC
IRR

Step 5: Output

  • Excel workbook with:
    • Assumptions tab
    • Returns calculation
    • Sensitivity tables (formatted with conditional coloring)
    • Scenario summary
  • One-page returns summary suitable for IC deck

Key Formulas

  • MOIC = Exit Equity Value / Equity Invested
  • IRR = solve for r: Equity Invested × (1 + r)^n = Exit Equity Value (adjust for interim cash flows)
  • Returns attribution:
    • Growth: (Exit EBITDA - Entry EBITDA) × Exit Multiple / Equity
    • Multiple: (Exit Multiple - Entry Multiple) × Entry EBITDA / Equity
    • Leverage: Debt paydown over hold period / Equity

Important Notes

  • Always show returns both gross and net of fees/carry where applicable
  • Management rollover and co-invest change the equity check — ask if relevant
  • Dividend recaps or interim distributions affect IRR significantly — include if planned
  • Don't forget transaction costs (typically 2-4% of EV) — they reduce Day 1 equity value
  • Tax considerations (asset vs. stock deal, 338(h)(10) election) can materially affect after-tax returns

Source and attribution

Source:anthropics/financial-servicesinplugins/agent-plugins/valuation-reviewer/skills/returns-analysisat commit574ed36

License: No license

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