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Complex LBO with PIK Debt

A sponsor buyout with a Term Loan B (cash sweep), a PIK mezzanine that accretes to principal, and a revolver that covers cash shortfalls. Build sources & uses, the full three-tranche debt waterfall, the PIK accretion, and the sponsor's MoIC and IRR. Every line must be linked, not pasted.

PE · Advanced · about 90 minutes · 37 guided steps

Lesson outline

Sources & Uses

  1. Step 1: Entry Enterprise Value
  2. Step 2: Term Loan
  3. Step 3: Mezzanine
  4. Step 4: Financing Fees
  5. Step 5: Asset Step-Up
  6. Step 6: Total Uses
  7. Step 7: Sponsor Equity
  8. Step 8: Sponsor Ownership of Common
  9. Step 9: Mandatory Amortization (annual)

Debt & Preferred Buildup

  1. Step 10: EBITDA
  2. Step 11: Term Loan: Opening Balance
  3. Step 12: Term Cash Interest
  4. Step 13: Mezz: Opening Balance
  5. Step 14: Mezz Cash Interest
  6. Step 15: Mezz PIK Interest
  7. Step 16: Revolver: Opening Balance
  8. Step 17: Revolver Interest
  9. Step 18: Cash Interest Income
  10. Step 19: Financing Fee Amortization
  11. Step 20: Step-Up Depreciation
  12. Step 21: Preferred: Opening Balance
  13. Step 22: Preferred Dividend Accrued
  14. Step 23: Taxes

Cash Sweep & Waterfall

  1. Step 24: Cash Available for Sweep
  2. Step 25: Revolver Draw
  3. Step 26: Revolver Paydown
  4. Step 27: Cash Sweep Paydown
  5. Step 28: Term Loan: Ending Balance
  6. Step 29: Mezz: Ending Balance
  7. Step 30: Revolver: Ending Balance
  8. Step 31: Preferred: Ending Balance

Exit & Returns

  1. Step 32: Exit Enterprise Value
  2. Step 33: Exit Equity Value
  3. Step 34: Common Equity Value
  4. Step 35: Sponsor Proceeds
  5. Step 36: Sponsor MoIC
  6. Step 37: Sponsor IRR