Leverage for a Capex-intensive business

Currently preparing an LBO for a quite capital intensive business. EBITDA is roughly 40m USD but Capex and D&A is roughly 20m every year so EBIT or (EBITDA - Capex) is only 20m. 

Businesses in the industry are usually valued on an EBIT or (EBITDA-Capex) basis. My VP is maintaining that leverage for the purpose of our LBO will be based on EBITDA. This leads to very high leverage and IRR in our analysis. To illustrate see the example below:

EBIT 22E: 20m

Entry multiple: 11x

EV = 220m


EBITDA 22E: 40m

Leverage: 4.0x = 160m


My question: would banks/ debt funds really look at EBITDA or rather look at EBIT or a cash flow metric for the purpose of financing offers?


 
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