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Based on the most helpful WSO content, your approach seems reasonable and aligns with common practices in private equity transactions. Here are some key considerations:

1. Incumbent Debt at OpCo Level:
   Keeping the incumbent debt at the operating company (OpCo) level is often acceptable, especially if the interest rates on the existing debt are attractive. This can help maintain a lower cost of capital for the overall transaction. However, you should ensure that the existing debt covenants allow for the change in ownership and any new debt issuance at the SPC level.

2. Funding 51% Equity Value with SPC New Debt and Sponsor Equity:
   Structuring the deal with new debt at the special purpose company (SPC) level and sponsor equity is a common approach in partial buyouts. This allows the sponsor to leverage the transaction while maintaining flexibility at the OpCo level. The SPC debt would typically be secured by the equity stake in the target company and not directly impact the OpCo's balance sheet.

3. Key Considerations for Your Model:

   • Debt Covenants: Verify that the incumbent debt covenants do not restrict changes in ownership or additional debt at the SPC level.
   • Debt Service Coverage: Ensure that the OpCo's free cash flow can comfortably service the incumbent debt, and the SPC's cash flows can handle the new debt obligations.
   • Synergies and Returns: Consider how the partial buyout structure impacts the sponsor's ability to achieve desired returns, especially if the sponsor does not have full control over the target company.
   • Exit Strategy: Plan for how the SPC debt will be repaid or refinanced upon exit, and how the sponsor will realize value from the 51% stake.

Your assumption to keep the incumbent debt at the OpCo level while funding the equity value with SPC new debt and sponsor equity is a practical and often-used structure in such scenarios. Just ensure that your model accounts for all the above factors to validate the feasibility and attractiveness of the transaction.

Sources: How Private Equity Owned Companies Fund Add-Ons, SaaS LBO, Reasonable entry multiple for buyout target?, Special Sits PE Case Study Example, M&A Question Asked by PJT London