Sources and Uses statement - private LBO model
I need help with a basic lbo model -I'm a newbie and have done as much research as I can, want to confirm I'm handling debt and fees correctly. Given assumptions:
- The purchase price is $33 million. The owner must pay off the existing debt at closing from the proceeds he receives.
- Assume the purchase was completed on 12/31/2016
- Senior debt limited to 2.5x EBITDA; interest -3%; this is a revolver, so all cash above $500k is applied to the revolver, then to the Mezz debt.
- Mezz debt limited to 3.5x EBITDA, including senior debt; interest - 12%, plus 3% warrants given the Mezz lender. Strike price is based on the equity value of the new capital structure.
- Remaining capital structure is equity, of which owner has 15%.
- Owner deal costs are $1.2mm
- PE deal costs are $600k – The Company pays these costs, but are not deducted from owner proceeds
I'm struggling with my sources and uses statement -
EBITDA: $6,420k
Current cash from balance sheet: $175k
Debt from balance sheet: $12,602k
Do I include debt in the total purchase price? or include lines for refinanced debt? how do I account for the fees owed by the owner? Do I have my Mezz debt correct? Here's where I am now:
Sources:
Cash - 175
Senior debt - 16,050 (2.5x EBITDA)
Mezz debt - 6,420 (1x EBITDA)
Sponsor Equity / Cash - 11,545
Management Equity - 36,227
Uses:
Equity purchase price - 20,573 (total purchase price less debt)
Debt assumed by seller - 12,602
Financing Fees - 1,252 (3% for senior debt, 12% for Mez debt)
Transaction costs - sponsor - 1,200
Transaction costs - seller - 600
Total uses: 36,227
