Do a paper LBO in your head, then answer quickly as the interviewer changes the entry multiple, the interest rate and the exit multiple.

The base case returns about 2.6x and 21%. Interest at 12% costs about two points, to 19.4%; exit at 7.0x costs about five, to 16.5%; and entry at 9.0x costs about seven, to 14.6%, because it raises the equity cheque on day one. Multiples move returns far more than the cost of debt, and all three together leave 7.8%.

Round hard and say so. EBITDA grows 8% a year to about Rs 147 crore. Cash before interest is 55% of that, roughly 60 rising to 80, and interest starts at Rs 50 crore and falls as debt is repaid. Over five years about Rs 114 crore of debt is repaid, so exit debt is about Rs 386 crore against an exit value of Rs 1,175 crore, leaving Rs 790 crore of equity on Rs 300 crore in. That is 2.63x; 2.5x in five years is about 20% a year, so call it 21%.

Ask what each change touches. Entry at 9.0x touches only the cheque: equity becomes Rs 400 crore against the same Rs 790 crore at exit, 1.97x, about 15%. Exit at 7.0x touches only the end: one turn less on Rs 147 crore of EBITDA is Rs 147 crore off exit equity, Rs 643 crore, 2.14x. Interest at 12% touches the middle: Rs 10 crore more interest a year means less debt repaid, about Rs 60 crore more left at exit, 2.43x. Everything a paper LBOA leveraged buyout worked by hand or in your head in an interview, with rounded numbers, to show you understand what drives the return. asks is some version of this: find the line the change touches and carry it to exit equity.

Timing. A turn at entry is Rs 100 crore of extra equity today, and every rupee invested on day one must compound for five years. A turn at exit is a bigger number, Rs 147 crore, but it arrives in year 5, where at a 20% rate it is worth about Rs 59 crore today. Price paid is the decision a sponsor controls and the one returns are most sensitive to, which is why sponsors walk away from auctions over half a turn. Interest matters least because it only slows debt paydown, which is the smaller engine of this deal.

Close with the judgement an interviewer is fishing for. This deal relies on growth more than leverage: Rs 376 crore of the gain comes from EBITDA growth and Rs 114 crore from paydown. If growth slipped to 4%, the base case would drop far more than any single change above, so the diligence question is the 8% growth, not the 10% coupon.