Private Equity Case Study HELP!

I have a case study for a private equity fund coming up and they provided a CIM as reference but kept it very open ended. One caveat is that the CIM doesn't have any information on D&A and NWC. Also because it is open ended, the capital structure, libor spread, entry multiple are all up in the air. What would be the best way to go about this? Thank you

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Comments (6)

Oct 31, 2018 - 10:24pm

Well this is very analogous to what happens in real life - the bankers don't send over the CIM and say "assume a 10x entry, unitranche L+650 and oh yeah we'll give you all our data!" You have to make some reasonable assumptions and think it through.

Nov 1, 2018 - 10:06am

That's what I figured, but you can't just say let's assume a 10x entry multiple and a certain debt tranche with X% interest over Y term since you're given a week to do this...wouldn't you need an appropriate reason for those numbers? In that case what is the best way to go about thinking that through?

Nov 1, 2018 - 10:06am

Just use comps for the EV and total debt multiple. Easiest way to defend it.

I would assume NWC as a % of sales stays constant. You'd need more info than a CIM to build out an aging schedule.

Regular-way 1L/2L pricing is in the 400/800 context for a B3. Unis have been in the 550 area.

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