What are the 10 most common ways to increase IRR in an LBO?

10 ways to increase IRR include:

1. Growing revenue by expanding into new markets and ultimately increasing EBITDA
2. Growing revenue through add-on acquisitions and ultimately increasing EBITDA
3. Growing revenue by cross-selling to existing customers or achieving deeper customer penetration, therefore increasing EBITDA
4. Improving gross margins through greater bargaining power, sourcing better suppliers, or improving labor efficiency, therefore increasing EBITDA
5. Cutting SG&A costs through efficiencies of scale or best practices, therefore increasing EBITDA
6. Paying back debt, which increases equity ownership % by the time you sell the company
7. Increasing the exit multiple by making the business a more attractive long-term investment, such as improving the growth strategy, improving profitability by altering the product mix, or fixing internal issues with management and labor
8. Doing a dividend recapitalization, which involves borrowing money and issuing a dividend to equity investors
9. Using more leverage at the time of the deal, such as by borrowing junior debt (eg. mezzanine) as well as senior debt
10. Buying the company at a lower entry multiple