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Value Bridge Builder
Show how EBITDA growth, multiple movement, and deleveraging build or erode equity value.
Educational value attribution only. Not investment advice or a transaction fairness opinion.
Entry equity
$200.0M
Exit equity
$505.0M
Value creation
$305.0M
Exit EV
$605.0M
Positive and negative contributions reconcile entry to exit equity.
| Driver | Contribution | Share |
|---|---|---|
| EBITDA growth | 150 | 49.18% |
| Multiple change | 55 | 18.03% |
| Debt paydown | 100 | 32.79% |
Method
A value bridge turns an entry equity value and exit equity value into a set of explainable drivers. The calculation separates EBITDA growth valued at the entry multiple, multiple change applied to exit EBITDA, and debt paydown. Together, the drivers reconcile entry equity to exit equity.
Start with entry and exit EBITDA, valuation multiples, and net debt. The bridge uses a standard decomposition so each contribution can be reviewed independently. Negative contributions are retained, which is important when an exit multiple compresses or net debt rises.
1. Calculate entry equity
Multiply entry EBITDA by entry multiple and subtract entry net debt.
2. Attribute operating gains
Value EBITDA growth using the entry multiple.
3. Add market and balance-sheet effects
Apply multiple change and net debt movement.
4. Reconcile to exit equity
Review the contributions and their absolute share of value creation.
Value attribution is a useful discipline because it prevents a return from being summarized as a single number. EBITDA growth reflects operating improvement, organic expansion, add-ons, pricing, or margin gains. Multiple change reflects what the market pays for the business at exit. Debt paydown captures cash generation and capital structure discipline. In a high-quality underwriting case, the return should be defensible even without relying heavily on multiple expansion. When multiple expansion dominates, ask what must be true about market comps, growth durability, and exit process heat. When debt paydown dominates, ask whether cash conversion is structural or temporary. The bridge is not a substitute for a full model. The decomposition is sensitive to the selected method, and real transactions may require adjustments for dividends, fees, tax, working capital, add-on acquisitions, and other sources or uses. Use it to frame the investment committee discussion, then validate the inputs in the detailed underwriting inside the Super Simulator.
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Educational value attribution only. Not investment advice or a transaction fairness opinion.