Mini LBO Underwrite
You are underwriting a 5-year LBO for a private equity investment committee. Company (fictional): HarborTech Services (HTS) –…
Assumptions used Term Loan amortization = 1.0% of original $480m = $4.8m/yr Mezz PIK accrues to principal; mezz cash interest calculated on beginning mezz balance including PIK Cash taxes use: 25% x max(0, EBITDA - total cash interest); PIK is not cash-deductible FCF after required debt service is used for optional…Read the full answer
We need to build a simplified year-by-year table FY2026-FY2030. First, compute initial purchase price: EBITDA FY2025 = $120m. Purchase price = 12.0x EBITDA = 12 * 120 = $1,440m (enterprise value). Transaction fees = 2.0% of EV = 0.02 * 1440 = $28.8m, paid at close from equity. Total leverage at close = 5.5x EBITDA.Read the full answer