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
Entry & Capital Structure Math Entry EV = 12.0x × $120m EBITDA = $1,440.0m Transaction Fees = 2.0% × $1,440m = $28.8m (equity funded) Total Uses = $1,440.0m + $28.8m = $1,468.8m Debt Raised = 5.5x × $120m = $660.0m Term Loan: 4.0x = $480.0m (9.0% cash, 1.0% mandatory amort = $4.8m/yr) Mezzanine: 1.5x = $180.0m (12.0%…Read the full answer