Sources & Uses Help
Need some help on sources and uses.
- Sponsor buys Company A at 10.0x with $15 EBITDA.
- Finances purchase with 6.0x Debt/EBITDA
- Existing debt is 3.0x Debt/EBITDA
- Existing cash on B/S = 10
- Minimum cash = 5
The sponsor also wants to add another $25 of cash onto the balance sheet for immediate acquisitions.
Sources
- $90 Debt (6.0x * 15)
- $10 Existing Cash
- $80 Sponsor Equity
- Total = $180
Uses
- $45 Existing Debt (3.0x * 15)
- $5 Minimum Cash
- $25 Cash for Acquisitions
- $105 Equity (TEV - Existing Debt)
- Total = $180
Is this the right way to think about it?
Much appreciated.
Would expect some fees etc. but that may just be the prompt given
Sweet thanks. This was just something I came up with so I kept it simpler
To clarify, the equity in uses is calculated by TEV - existing debt and then cash for acquisitions / fees are on top of that to get to the total? Otherwise you’d be calculating fees etc. coming out of the prior owners equity?
Yes it’s simply $xm to pay for fees on top of this
Yes in short, this is correct. If the sponsor wants to inject cash (a use), they'll need to find it from somewhere (likely additional equity unless told otherwise)
No, add $5 excess cash to equity under Uses
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