5.8x MOIC.
In 2019 I invested in an all-equity 100% acquisition of a moderately-growing target. The entry multiple was around 5.5x. No debt and only a small sliver of pari passu rollover equity.
Last week it exited to a mid-cap PE fund, producing a 5.8x MOIC in 5.5 years.
An outstanding outcome which I attribute to:
(1) Excellent management, with the ability to plan and execute.
(2) Effective blocking and tackling, continually focusing on operational excellence and incremental improvements.
(3) Smart acquisitions and divestitures, enabled by the strong balance sheet with no initial debt.
Note that there was:
- No leverage to juice equity returns.
- No strategic shifts, just a continuation of what was already in place.
- Minimal rotation in the management, ensuring continuity and stability.
- Only a modest multiple expansion (to ~7.7x since EBITDA grew).
