Based on entrerpreneurial finance concepts, if a private equity firm acquired a company in Year 1 with the financials stated in Exhibit A and exited with the following financials on Exhibit B in year 5, did the private equity firm maximize its return for its investors based on its EBITDA growth? Why or why not? (Please explain based on course concepts)

Exhibit A Acquisition Pricing Trailing 12 months Revenue EBITDA Margin Trailing 12 months EBITDA Acquisition multiple Acquisition price $20.00 25% $5.00 4.0x $20.00 Exhibit B Investor Returns Cash/Cash Exit Pricing Trailing 12 months EBITDA $15.26 Exit Multiple Exit price $38.15 Exit multiple equal to 4.0x when EBITDA $6.0 million 2.5x Investment $1.72 $8.60 $0.43 $10.75 Subordinated Debt Preferred Equity (8% PIK) Common Equity Total Return $3.24 $12.93 $28.16 $44.33 1.9x 1.5x 65.5x 4.1x Common Equity Investors Option pool Principals Total Investor IRR Investor Cash/Cash 32% 4.1x 66.5% 5.0% 28.5% 100.0% $28.16 $2.12 $12.07 $42.34 Exhibit A Acquisition Pricing Trailing 12 months Revenue EBITDA Margin Trailing 12 months EBITDA Acquisition multiple Acquisition price $20.00 25% $5.00 4.0x $20.00 Exhibit B Investor Returns Cash/Cash Exit Pricing Trailing 12 months EBITDA $15.26 Exit Multiple Exit price $38.15 Exit multiple equal to 4.0x when EBITDA $6.0 million 2.5x Investment $1.72 $8.60 $0.43 $10.75 Subordinated Debt Preferred Equity (8% PIK) Common Equity Total Return $3.24 $12.93 $28.16 $44.33 1.9x 1.5x 65.5x 4.1x Common Equity Investors Option pool Principals Total Investor IRR Investor Cash/Cash 32% 4.1x 66.5% 5.0% 28.5% 100.0% $28.16 $2.12 $12.07 $42.34