returns-analysis
The facts
Its description
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".
The description the agent reads to decide when to use it.
When it starts
A person working a PE deal asks for quick returns math — IRR, MOIC, or sensitivity tables across entry/exit multiple, leverage, growth, and hold period — often as a back-of-the-envelope check or an IC returns exhibit. The description is all about sizing up a deal and stress-testing assumptions, so the agent picks it when the ask is returns numbers rather than a full model build.
Things a person might say (the model's guesses)
- “What's the IRR and MOIC on this deal at 8x entry and 10x exit over a 5-year hold?”
- “Build me a MOIC sensitivity table for the target we're sizing up.”
- “Give me a back of the envelope on the returns with 5x leverage.”
A model's summary of when it is used.
What leads to it
- valuation-reviewer calls this valuation-reviewer, line 20
Other skills that hand off to this one, call it, require it or offer it instead, as a model read them.
Licence
Apache-2.0, from LICENSE
The terms its author shares it under, which let it be shown here.
The text
Returns Analysis
Raw lines 1 to 7Workflow
Raw lines 8 to 9Step 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:
| Metric | Value |
|---|---|
| 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 6x | Exit 7x | Exit 8x | Exit 9x | Exit 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).
Raw lines 62 to 81Step 4: Scenario Analysis
Build 3 scenarios:
| Bull | Base | Bear | |
|---|---|---|---|
| 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
From anthropics/financial-services at 6056506, 2026-10-28. Skills read by DeepSeek V4.1 Flash on 2026-11-04. Summary and techniques by Claude Opus 5.5 on 2026-11-06.