LBO & Paper LBO
Build a Sources & Uses with real frictions: EV $1,000 (EBITDA $120, cash-free debt-free), $600 TLB at 5.0x issued at 98 with 2% financing fees, $20 transaction fees, $10 minimum cash. What's the equity check?
Model answer
Uses: purchase enterprise value 1,000 + transaction fees 20 + financing fees (2% x 600 = 12) + OID (2 points x 600 = 12) + minimum cash 10 = 1,054 total. Sources: TLB at face 600 + sponsor equity…
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