5.2·6 min read
Which Lever Matters Most
Multiple expansion is the most powerful but least controllable; EBITDA growth is durable; debt paydown is reliable but smaller.
By the end you can
- ✓Rank the levers by power and controllability
- ✓Explain why sponsors prize operational improvement
Most powerful
- › - biggest swing per dollar
- ›But: depends on market sentiment, hard to control
- ›Risky to underwrite a deal on it
Most dependable
- ›EBITDA growth - durable, reflects real improvement
- ›Debt paydown - reliable, typically 20-30% of returns
- ›Both are within the 's control
Underwrite what you control
Because is a gift from the market, disciplined sponsors base the deal on EBITDA growth and - the levers they can actually pull - and treat any multiple uplift as upside, not the plan.
Check yourself
Why do careful sponsors avoid underwriting a deal primarily on multiple expansion?