Walkthrough · Lesson 1 of 5
Fund the seller and the refinance
Translate enterprise value into uses and sponsor cash.
Working files
The template contains historical inputs and closing terms.
Treat pre-close debt separately from the new senior and subordinated facilities.
Build the live model
Calculate historical EBITDA
Multiply $84m FY2025 sales by the 18% EBITDA margin. Price the acquired business at 8.25x that amount.
84 × 18% × 8.25 = $124.74m EV.Bridge enterprise to equity
Deduct the $12m old net debt for seller equity consideration and add its refinancing as a separate use. Include $2m fees. New acquisition debt totals $63m.
Watch for Using EV as seller equity consideration then refinancing the old debt counts it twice.
Check the model and defense
Total uses of $126.74m and sponsor cash of $63.74m.
- Reference result · See Instructions!C7:C39. The worked transaction inputs are at Model Exercise!D7:E27. Model amounts are USD thousands. Sponsor cash equity$63.7m
At close, total uses less $47m senior and $16m subordinate debt.
- Mechanical check · At close Sources equal uses
Term financing plus equity funds consideration, fees and refinancing exactly.
If your result differs
- Sponsor cash is $12m too high.
Check the seller receives equity value rather than enterprise value.