Mini LBO Underwrite
You are underwriting a 5-year LBO for a private equity investment committee. Company (fictional): HarborTech Services (HTS) –…
Entry capitalization and operating model All figures in $m. Interest is calculated on beginning-of-year debt balances. Term Loan amortization is 1% of its original principal, or $4.8m annually; remaining cash flow is swept to the Term Loan at year-end. Mezzanine PIK accrues 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