Trying to think through how a leveraged buyout of half a private company in a JV would work differently in terms of sources and uses, balance sheet adjustments etc. from a financial modeling perspective.
How should I think about debt? I assume the PE firm would take out all of the existing debt correct?
Any insight or resources online that would help?
Thanks in advance.
I wouldn't overcomplicate this - fundamentally this is essentially a PE fund acquiring 50% of the equity of a standalone company (and whatever the other owner of the JV is the other shareholder). Depending on if it's actually a change of control or not, you either roll the existing debt, or the entire JV entity refinances their debt.
Then, you just project the financials of the company, and at "exit," PE fund gets 50% of the distributions. So imagine you're buying 50% of a JV that you've arbitrarily valued at $1Bn TEV, with $500M debt, and let's assume the debt gets refinanced at the same quantum (and ignore fees):
Then you just do normal LBO math, projections, etc
Thanks this is helpful. I tend to try to overcomplicate.
Will come back if I have any additional questions haha
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