I am posting this in the PE forum as this may be more relevant here.
Hey WSO'ers. I need help with an upcoming case study. I have the prompt and will share just a portion in this post. I am trying to understand what exactly they are asking for. I have reached out to company, but HR is handling and isn't too much help.
Take a look: "Based on the information below, please develop a financial model to evaluate the economics and financing considerations of the transaction. Be sure to include sources and uses, credit metrics, and equity returns. Please also include a 10-year pro-forma P&L forecast for buyer post-transaction. "
I have changed the number and metrics. I am not looking to cheat but to understand what is being asked. It starts to sound like a paper LBO but there is no eventual sale. They are just acquiring the company and holding it. Is this just looking for return on equity? Thoughts?
Transaction $50mm 50% Debt, 50% Equity
Buyer Yr1 EBITDA: 40 Yr2 EBITDA: 45 Yr3 EBITDA: 50 Yr4 EBITDA: 55 Yr5 EBITDA: 60 $2mm capex
Target - Cash free, debt free Yr1 EBITDA: 12 Yr2 EBITDA: 14 Yr3 EBITDA: 16 Yr4 EBITDA: 18 Yr5 EBITDA: 20 $1mm capex
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