Mini LBO Underwrite

1) Simplified FY2026–FY2030 Operating & Debt Table

(Figures in $m; ΔNWC is outflow; “FCF after debt service” = EBITDA – cash interest – cash taxes – capex – ΔNWC. Optional Term Loan paydown uses remaining FCF after required 1% amortization.)

FY	Revenue	EBITDA	Term Interest	Mezz Interest	Cash Taxes	Capex	ΔNWC	FCF after debt service	Term Loan amortized (1%)	Optional Term paydown	Ending Term Debt	Ending Mezz Debt (incl. PIK)
2026	972.0	136.1	43.2	21.6	22.0	29.2	3.6	16.6	4.8	11.8	463.4	192.5
2027	1,040.0	156.0	41.7	23.1	27.3	31.2	3.4	29.3	4.8	24.5	434.1	204.4
2028	1,102.4	176.4	39.1	24.5	32.2	33.1	3.1	44.5	4.8	39.7	389.6	217.9
2029	1,157.5	191.0	35.1	26.1	35.7	34.7	2.7	52.4	4.8	47.6	337.2	232.8
2030	1,215.3	206.6	30.3	29.7	37.7	36.5	2.9	66.6	4.8	61.8	270.6	249.9

Key notes on the table:

• EBITDA derived from revenue × margin.
• Taxes = 25% × max(0, EBITDA – total cash interest).
• Optional Term Loan paydown equals remaining FCF after deducting the 1% mandatory amortization (4.8) and is applied entirely to Term Loan.
• Mezzanine balance grows by 2% PIK each year.

2) Exit & Investment Returns

• FY2030 EBITDA: $206.6m.
• Exit EV = 10.5 × 206.6 = $2,167m.
• Exit fees = 1% × 2,167 = $21.7m paid at exit.
• Net proceeds before debt repay = $2,167 – 21.7 = $2,145.3m.
• Debt repay at exit: Term = $270.6m; Mezz = $249.9m → total $520.5m.
• Equity proceeds = $2,145.3 – $520.5 = $1,624.8m.
• Initial Equity Invested (includes transaction fees): $808.8m.
• Holding period ~5 years.

Equity Returns

• MOIC = $1,624.8 / $808.8 ≈ 2.01x
• IRR: solve (1.0 + IRR)^5 = MOIC ⇒ IRR ≈ 15.1%

3) Sensitivity: Equity IRR vs Exit Multiple & FY2030 EBITDA Margin

	Exit Multiple 9.5x	10.5x (Base)	11.5x
FY2030 EBITDA 16.0%	12.5%	13.8%	15.2%
FY2030 EBITDA 17.0%	13.5%	14.9%	16.3%
FY2030 EBITDA 18.0%	14.5%	15.9%	17.3%

(Exit EBITDA margin tweaks revenue and EBITDA accordingly, keeping other assumptions constant; exit value scales with margin and multiple.)

4) Risks

1. Customer concentration – data-center clients may renegotiate or switch due to single-supplier dependency.
2. Inflation in labor costs – recurring service model sensitive to technician wage pressure, squeezing margins.
3. Technology obsolescence – monitoring solutions may fall behind newer automation tools, reducing renewal rates.
4. High leverage – 5.5x total leverage leaves limited cushion for revenue/margin dips before debt covenants strain cash taxes & capex coverage.
5. Interest rate volatility – floating-term rates (if repriced) would increase cash interest, further burdening FCF.

5) Downside Protection Levers

1. Dense cash conversion – aggressive working capital management to minimize ΔNWC beyond the 0.5% assumption.
2. Capex discipline – maintaining capex at or below 3% of revenue to preserve FCF for debt paydown.
3. Accelerated paydown – optional prepayments deployed whenever FCF allows to reduce term balance faster.
4. Pricing adjustments – annual escalators or CPI indexation in contracts to protect margins.
5. Service-level diversification – expanding into complementary predictive-maintenance offerings to offset base-service risks.

Let me know if you’d like a debt waterfall or covenant analysis.