Transaction assumptions

1.A. How much are we repurchasing the company for ?

1. B. How much debt and equity are being used to buy the company ?

We are a PE company purchasng "company alpha" at the end o 2021

Purchase multiple 10x LTM EBITDA
Revenues 2021 200 $m
Revenue growth 25 $m annually
EBITDA margin 50%
D&A and CAPEX 10% of revenues
No change in NWC
Tax rate 50%
Initial leverage 5x LTM EBITDA
Interest rate 10%
Exit after 3 years of projections at a 10x LTM EBITDA multiple

1.A.
Purchase price build
LTM Revenue (2021) $ 200.00
EBITDA Margin 50%
LTM EBITDA (2021) $ 100.00
Entry Multiple 10.00
Purchase price $1,000.00

Forecast income statement & CF

Income statement all the way down to FCF
3-5 years
2.A. How muh FCF is the businss genrating ?

2021 2022 2023 2024

Revenue $ 200.00 $ 225.00 $ 250.00 $ 275.00
EBITDA Margin 50% 50% 50% 50%
EBITDA $ 100.00 $ 112.50 $ 125.00 $ 137.50
(-) D&A $ 22.50 $ 25.00 $ 27.50
EBIT $ 90.00 $ 100.00 $ 110.00
(-) Interest $ 50.00 $ 50.00 $ 50.00
EBT $ 40.00 $ 50.00 $ 60.00
(-) Taxes $ 20.00 $ 25.00 $ 30.00
Net Income $ 20.00 $ 25.00 $ 30.00
(+) D&A $ 22.50 $ 25.00 $ 27.50
(-) CAPEX $ (22.50) $ (25.00) $ (27.50)
(-) Change in NWC 0 0 0
Cash Flow $ 20.00 $ 25.00 $ 30.00
Cumulative Cash Flow $ 75.00

Calculate debt paydown and returns

3. A. How much debt is pay down during the forecast period ?
3.B. How much cash are we getting back on our investment ?

3.A 3.B
Debt Paydown Exit
Initial Net Debt $ 500.00 Exit EBITDA (2024)
(-) Cumulatibe Cash Flow $ (75.00) Exit Multiple
Ending Net Debt $ 425.00 Ending EV
Ending Net Debt
Ending Equity Value

MoM
IRR
1.B
Initial Leverage 5 x EBITDA

Debt financing $ 500.00

Equity financing $ 500.00
 Exit
EBITDA (2024) $ 137.50
10 x
$1,375.00
ng Net Debt $ (425.00)
ng Equity Value $ 950.00

1.9
24 Rule of 72
© Corporate Finance Institute®. All rights reserved.
DCF Model

Assumptions
Tax Rate 25% C
Discount Rate 12% $50,000
$45,000
Perpetural Growth Rate 3% $37,715
$40,000
EV/EBITDA Mulltiple 7.0x $35,000
Transaction Date 12/31/2017 $30,000
Fiscal Year End 6/30/2018 $25,000
$20,000 $17,747
Current Price 25.00 $15,000
Shares Outstanding 20,000 $10,000
Debt 30,000 $5,000
$0
Cash 239,550 2018 2019
Capex 15,000

Discounted Cash Flow Entry 2018 2019

Date 12/31/2017 6/30/2018 6/30/2019
Time Periods 0 1
Year Fraction 0.50 1.00
EBIT 47,814 51,095
Less: Cash Taxes 11,954 12,774
Plus: D&A 15,008 15,005
Less: Capex 15,000 15,000
Less: Changes in NWC 375 611
Unlevered FCF 35,494 37,715
(Entry)/Exit (290,450)
Transaction CF - 17,747 37,715
Transaction CF (290,450) 17,747 37,715

Intrinsic Value
Enterprise Value 462,983
Plus: Cash 239,550
Less: Debt 30,000
Equity Value 672,532

Equity Value/Share 33.63

Instructions
Step 1: Get EBIT and D&A from the income statement
Step 2: Calculate the net working capital
There are two ways to find NWC:
1. NWC = Current Assets (less cash) - Current Liabilities (less debt)
2. NWC = Accounts Receivable + Inventory - Accounts Payable
 Ce graphique n’est pas disponible dans v
Cash Flow
$47,008 La modification de cette forme ou l’enre
$43,510 un autre format de fichier endommagera
$41,501
$37,715 irréparable.

$17,747

2018 2019 2020 2021 2022

2020 2021 2022 Exit

6/30/2020 6/30/2021 6/30/2022 6/30/2022
2 3 4
1.00 1.00 1.00
55,861 58,693 63,039
13,965 14,673 15,760
15,003 15,002 15,001
15,000 15,000 15,000
398 511 272
41,501 43,510 47,008
542,129
41,501 43,510 47,008 542,129
41,501 43,510 47,008 542,129

Market Value
Market Cap 500,000
Plus: Debt 30,000
Less: Cash 239,550
Enterprise Value 290,450

Equity Value/Share 25.00

graphique n’est pas disponible dans votre version d’Excel.

modification de cette forme ou l’enregistrement de ce classeur dans

autre format de fichier endommagera le graphique de façon
parable.

Terminal Value
Perpetural Growth 537,981
EV/EBITDA 546,278
Average 542,129

Rate of Return
Target Price Upside 35%
Internal Rate of Return (IRR) 26%

Market Value vs Intrinsic Value

Market Value 25.00
Upside 8.63
Intrinsic Value 33.63

This file is for educational purposes only. E&OE