Mini LBO Underwrite
You are underwriting a 5-year LBO for a private equity investment committee. Company (fictional): HarborTech Services (HTS) –…
HarborTech Services: 5-Year LBO Underwriting Conventions: $m. Interest is charged on beginning-of-year balances, which avoids circularity. Term Loan (TL) amortization is 1% of the original $480m, or $4.8m per year. Mezz PIK accrues to principal. All FCF after mandatory debt service sweeps to the TL.Read the full answer
Sources, uses, and operating model Entry enterprise value: [ 12.0x \times \$120.0m=\$1,440.0m ] Transaction fees: [ 2.0\% \times \$1,440.0m=\$28.8m ] Debt at close: Term Loan: (4.0x \times \$120m=\$480.0m) Mezzanine: (1.5x \times \$120m=\$180.0m) Total debt: (\$660.0m) Sponsor equity…Read the full answer