Leveraged Finance & Credit
A sponsor buys a company at 6.0x EBITDA of $200mm ($1.2bn EV). They want 4.0x total leverage. Sketch a plausible debt stack by tranche and the equity check.
Model answer
Total debt = 4.0x x $200mm = $800mm; equity = $1.2bn EV − $800mm = $400mm (plus fees, funded with more equity or cash). A plausible stack: Revolver $75mm undrawn (not counted in funded debt); TLB…
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