Mini LBO Underwrite
You are underwriting a 5-year LBO for a private equity investment committee. Company (fictional): HarborTech Services (HTS) –…
Key assumptions Entry closes at end of FY2025; exit at end of FY2030. Interest is calculated on beginning-of-year debt balances. Term Loan amortization = 1.0% of original Term Loan principal = $4.8m/year. Mezz PIK = 2.0% of beginning-of-year Mezz balance, added to principal annually.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