DIRECTIONS:

You have been asked to evaluate an acquisition of a fictional private s

The following is the summary of the term sheets you received

Assume it was decided that the entry premium should be 9.0x

A group of investment bankers have indicated that the compa
Revolver: 0.5x 2024 EBITDA with L+500 cash interest with all excess
Term Loan A: 2.5x 2024 EBITDA with L+500 cash interest. 1% manda
Mezzanine: 2.0x 2024 EBITDA with a 5% PIK and 10% cash interest. N
Sweep all excess cash flow down to the revolver

Transaction Assumptions
-All existing debt is refinanced at the time of the transaction
-Financing fees are listed on the supporting schedule (SS) tab and sho
-Transaction fees are 20 million
-Assume interest income is earned on the average cash balance at a r
-Assume minimum operating cash balance of $25 million

-Assume that the target company has reported its assets at the Fair V

Debt EBITDA multiple Interest Financing Fee

Revolving Credit Facility 0.5x L + 500 2.5%
Term Loan A 2.5x L + 500 2.5%
Mezzanine 2.0x 5% PIK / 10% 3.0%
onal private shared office space company, Let'sWork.

you received:

ould be 9.0x 2024 EBITDA and the transaction closes on 12/31/24.

at the company should be able to support 5.0x total leverage based o
with all excess cash used to paydown the revolver first
est. 1% mandatory annual amortization. With all excess cash used to paydow
cash interest. No repayment allowed.

S) tab and should be amortized over 15 years

balance at a rate of 2%
million
2
s at the Fair Value only
s on 12/31/24.
everage based on EBITDA generated in 2024.

sh used to paydown remaining debt after the revolver (if drawn)

Requirements:
For this model you will work on separ
-Build out fully integrated financial sta
-Fill out the Sources and Uses table
-Create supporting schedules: both D
-Perform exit analysis of a 9.0x EBITD
-Create Sensitivity Tables for IRR and
will work on separate tabs with the template provided
grated financial statements with historicals provided through 2024
s and Uses table
schedules: both Debt and PP&E
sis of a 9.0x EBITDA multiple. Show IRR and MoM
Tables for IRR and MoM showing different exit multiples and exit year
h 2024

d exit year
Scenario 1

Income Statement Assumptions/Drivers Scenario 1 2 3

Sales Growth 15.0% 15.0% 15.0%
1 15.0% 15.0% 15.0%
2 10.0% 10.0% 10.0%
3 5.0% 5.0% 5.0%
EBITDA Margin

COGS (% of Sales) 55.0% 55.0% 55.0% 55.0%

SG&A (% of Sales) 30.0% 30.0% 30.0% 30.0%
Depreciation (% of Capex) 80.0% 80.0% 80.0% 80.0%
Tax Rate 35.0% 35.0% 35.0% 35.0%

BS Assumptions/Drivers 0 1 2 3
Days Sales Outstanding (Sales) 73 73 73 73
Days of Inventory in Hand 66 66 66 66
Prepaid Expenses (% of Sales) 5% 5% 5% 5%
Days Payables Oustanding (COGS) 66 66 66 66
Accrued Liabilities (% of Sales) 5% 5% 5% 5%

365
4 5
15.0% 15.0%
15.0% 15.0%
10.0% 10.0%
5.0% 5.0%

55.0% 55.0%
30.0% 30.0%
80.0% 80.0%
35.0% 35.0%

4 5
73 73 Revenue/AR 365*AR/revenue
66 66
5% 5%
66 66
5% 5%
INCOME STATEMENT Actual Projections
2024 2025 2026 2027 2028 2029

Total Net Sales 1,000 1,150 1,323 1,521 1,749 2,011

COGS (550) 633 727 836 962 1,106
Gross Profit 450 518 595 684 787 905
% Margin 45% 45% 45% 45% 45% 45%

SG&A (300) 345 397 456 525 603

EBITDA 150 173 198 228 262 302
% Margin 15% 15% 15% 15% 15% 15%

Depreciation (50) 46 53 61 70 80

EBIT 100 127 145 167 192 221

% Margin (of sales) 10% 11% 11% 11% 11% 11%

Amortization of Deferred Financing Fees 1.35 1.35 1.35 1.35 1.35

Interest Expense
Revolver 5 5 4 3 1
Term Loan 26 26 26 25 25
Mezzanine Debt 30 32 33 35 36
PIK Interest on Mezz 15 16 17 17 18
Total Interest Expense 77 78 79 80 81

Interest Income 2%

Pre-Tax Income 100 49 66 87 111 139

Tax Expense 17 23 30 39 49
Net Income 32 43 56 72 91
From Assumptions
From Assumptions

From Assumptions

Plant & Machinary Schedule

Financing Fees Schedule

Debt Schedule
Debt Schedule
Debt Schedule
Debt Schedule

Condition is been given

EBIT-Amrtisation-Interest Expense + Interest Income

BALANCE SHEET ACTUAL Projections
2024 2025 2026 2027 2028 2029

Cash $100 21 18 14 10 7
Accounts Receivable 200 230 265 304 350 402
Inventory 100 115 132 152 175 201
Prepaid Expenses 50 58 66 76 87 101
Total Current Assets $450 424 480 546 622 711

Property, Plant & Equipment $800 812 825 840 857 878
Deferred Financing Fees 0 18.90 17.55 16.20 14.85 13.50
Goodwill 100 370 370 370 370 370
Intangibles 0 - - - - -
Total Assets 1,350 1,624 1,693 1,772 1,865 1,972

Accounts Payable $100 115 132 152 175 201

Accrued Liabilities 50 58 66 76 87 101
Total Current Liabilities $150 173 198 228 262 302

Revolver Outstanding $0 69 56 37 9 0
Existing Debt 450 0 0 0 0 0
Term Loan 0 371 368 364 360 328
Mezzanine Debt 0 315 331 347 365 383
Total Debt Outstanding $450 755 754 748 734 711

Deferred Tax Liability 0 - - - - -

Shareholders' Equity 750 697 740 796 868 959

Total Liabilities and Equity $1,350 1,624 1,693 1,772 1,865 1,972
Check ok - - - - -

NWC 30 35 40 46 52

Working Capital $200 $230 $265 $304 $350 $402

Ending Cash frm Cash flow
DSO * Sales / 365
DIO * COGS / 365
Assumptions * Revenue

Debt Schedule End Value

Finance Schedule End Value
New Good will remain Same

DPO * COGS / 365

Assumptions * Revenue

NULL

Owners Equity
Transaction Assumptions Sources Uses
Entry Level 9.0x Term Loan 375 Equity Value 1,000
EBITDA 150 Mezzanine 300 Transaction Fees 20
Total Enterprise Value (TEV) 1350 cash - cash min 75 Financing Fees 20
Plus: Cash 100 RCF 75 Existing Debt 450
Less: Debt (450) sponsor equity $ 665
Equity Value 1,000 Total 1490 Total $ 1,490

Check Sources=Uses
Cash Min/minimum operating cash balance 25

EV = EQUITY VALUE + DEBT VALUE - CASH

Debt EBITDA multiple Interest Financing Fee Amount of loan taken

Revolving Credit Facility 0.5x L + 500 2.5% 75
Term Loan A 2.5x L + 500 2.5% 375 LIBOR
Mezzanine 2.0x 5% PIK / 10% 3.0% 300
Total Leverage 750
Purchase Accounting
Equity Value 1,000
Less: Book Value (750)
Plus: Fees 20
Plus: Existing Goodwill 100
Excess Purchase Premium 270
New Goodwill 370

2%
Cash Flow Statement Actual Projections
2025 2026 2027 2028 2029

Net Income 32 43 56 72 91
Plus: Depreciation 46 53 61 70 80
Plus: Deferred Financing Fees 1.35 1.35 1.35 1.35 1.35
add non cash
Plus: PIK Interest 15 16 17 17 18
Change in Working Capital (30) (35) (40) (46) (52)
CapEx (58) (66) (76) (87) (101)
CADR /cash available for debt repayment 6 12 19 28 38

Beginning Cash 25 21 18 14 10
Mandatory debt paydown 4 4 4 4 4
Debt available for discretionary paydown 28 30 33 38 44
Discretionary paydown 6 12 19 28 38

Ending Cash 21 18 14 10 7
add non cash expenses to the net income to get free cash flow
Debt Schedule
2025 2026 2027 2028 2029
Excess Cash 6.5 12.3 19.3 27.7 37.6

Revolving Credit SWEEP ON

Beg Balance 75 69 56 37 9
Mandatory Payment Mandatory 0% 0 0 0 0 0
Cash Sweep Cash Sweep 100% 6 12 19 28 9
End Balance 69 56 37 9 0
Cash Left to Paydown 0 0 0 0 28

Interest 7% 5 5 4 3 1

Term Loan SWEEP ON

Beg Balance 375 371 368 364 360
Mandatory Payment Mandatory 1% 3.75 3.71 3.68 3.64 3.60
Optional Payment Cash Sweep 100% 0 0 0 0 28
End Balance 371 368 364 360 328
Cash Left to Paydown -4 -4 -4 -4 -32

Interest 7% 26 26 26 25 25

Mezzanine
Beg Balance 300 315 331 347 365
PIK Interest 5% 15 16 17 17 18
End Balance 315 331 347 365 383

Interest 10% 30 32 33 35 36
Total Debt

PP&E Schedule
2025 2026 2027 2028 2029
Beg PP&E 800 812 825 840 857
Plus: CAPEX 58 66 76 87 101
Capex % of sales 5% 5% 5% 5% 5%
Less: Depreciation 46 53 61 70 80
Depreciation % of Capex 80% 80% 80% 80% 80%
End PP&E 812 825 840 857 878

Amortization of Financing Fees 1.35

Financing Fees
2025 2026 2027 2028 2029
Beginning Fees 20 19 18 16 15
Amortization of Financing Fees 1.35 1.35 1.35 1.35 1.35
Ending Fees Balance 18.90 17.55 16.20 14.85 13.50
Returns Analysis 1 2 3 4 5
2025 2026 2027 2028 2029

Exit Mutiple Scenario 1

EBITDA
EV
Plus Cash
Less Debt
Equity Value
MoM
IRR

Assumptions
EXIT Multiple 9.0x
Invested Capital 1
2
3

IRR for 5th Year

Exit Multiple 5.0x

6.0x
7.0x
8.0x
9.0x
10.0x
11.0x
12.0x
IRR

Exit Year
0% 1 2 3 4 5 0.0x
Exit Multiple 7.0x Exit Multiple 7.0x
7.5x 7.5x
8.0x 8.0x
8.5x 8.5x
9.0x 9.0x
9.5x 9.5x
10.0x 10.0x
MoM

Exit Year
1 2 3 4 5