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It trashes your IRR though. Now what does the sponsor make?

IRRs have been waning the last few years anyway, to the point folks will look at 12.5%. There is a lot of money chasing PE allocations. Of course top quartile funds will just pull further away from the pack.

Not really, that rule of thumb is that if you can grow EBITDA at higher percentage than the EBITDA multiple you bought at, thing will just work out fine (e.g. buy at 20x need 20% cagr on earning over the next 5 years)

There was a recent Economist article that said that 6% of the performance in PE is driven by earnings growth. It’s a Ponzi scheme built on debt because PE has so much money that they just trade around companies at higher multiples. Lol imagine believing in synergies, or that the trash you guys make is somewhat legitimate at all. Cutting shit to the bone and sending it to the next guy isn’t good business.

Enjoy the money and the carried interest loophole while it lasts. Community Health Systems? Dex Media? I’m not one of the fools that will buy it. Maybe it helps you sleep at night or whatever but if rates continue to spike, all the trash adjusted EBITDA nonsense will all die and you guys will lose your shirts.

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