Need LBO Model Help

Hello Fellow WSOers,

I am stumped thinking how I can about setting up the following LBO after being given a CIM:

For sources and uses, assume a purchase of 65% of the company and a equity rollover equal to 35% of the purchase price. Assume leverage of 3.5x EBITDA in senior debt.

The task is to build a three statement short form LBO using a given CIM for a private company. The way I was thinking that the purchase price would be 65% of total Debt and Equity which would also include 35% equity rollover but is that a right way to approach it?

Thanks for any and all advice

Update: Thanks for all the incredibly helpful responses. Much appreciated!!!

 

Thanks for the response. My EBITDA is 11 million in this scenario and Total EV is 100 with Net Debt of 35 and Equity of 65.

I can PM you other details given the nature of the question.

Authored by: Certified Corporate Development Professional - Director
 

Is your question how to set up the S&U? This is how I interpret the info you've provided:

Sources: 38.5 Senior Debt (11mm x 3.5) 35.0 Rolled Equity 30.0 New Cash Equity

Uses: 3.5 Cash to Balance Sheet (to get to your $35 net debt figure) 35.0 Rolled Equity 65.0 Purchase of remaining equity (or refinancing existing debt if there was any)

New Cap Structure 38.5 Senior Debt 65.0 Equity 3.5 Cash

 
Best Response

The only question I would have for that is I am only purchasing 65% of the company, so if that ultimately would be the 65% of the Total Enterprise Value (assuming a entry of 8x)? The way I ultimately thought about it:

TEV at 100%: 88 TEV at 65%: 57.2

Source: 5 - Min Cash already on balance sheet

38.5 - Senior Debt (11mm x 3.5) 7.4 - Rolled Equity (35% of TEV at 65%) 30.0 - New Cash Equity

Uses: 3 - Min Cash 57.2 - Purchase of remaining equity (or refinancing existing debt if there was any) 2 - Advisory Fees

New Cap Structure 38.5 - Senior Debt 37.4 - Equity 3.5 - Cash

Am I thinking of this right?

Authored by: Certified Corporate Development Professional - Director
 

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