I'm practicing LBOs for an upcoming interview and notice cell H20. I know how to use it in the calculation but don't know what it means and have trouble understanding from the relevant wikipedia article. Can anyone explain?
https://multipleexpansion.com/excel/blank-easy-lb…
This is from the multipleexpansion.com website
Thank you so much as always and SB coming your way for the help.
You have a mandatory payback each year of 1% of principal
Great. Crystal clear. Thank you!
That strikes me as not a lot.
What are the usual ranges of amortization of a term loan?
Why bother with this if it is only 1% over a number of years - does it really have that much of a cumulative benefit?
Sometimes you see a higher amortization, or something that escalates each year. I have seen annual amort of 5%, or something that is like 50% paid back in 3 or 5 years. It all depends on what the borrower and lender think works best and is at market.
I appreciate the clear explanation, thank you again.
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