Loading library
Mid-Market Private Equity Fund
An independent practice case, not supplied or endorsed by the named firm.
Build a three-statement LBO for a winter-services business and assess the proposed price and capital structure.
Build a three-statement LBO for a winter-services business and assess the proposed price and capital structure. You have three hours and a blank spreadsheet. Compare the operating cases and test the debt package against the required downside covenant headroom.
The founder built Ellisfield over three decades, from a single salt barn into a network of depots, and is now retiring. He has told one of the fund's partners, who knows him well, that he wants 8.0x FY2025 EBITDA (£120m) for the business. Price is not all he cares about. He watched a heavily indebted rival fail after two mild winters, so he will judge bidders on how much debt they put on the company and whether it could ride out a run of mild winters. The partner has secured a first look, and a credible offer could keep the founder from running a wider sale process.
The founder has made one condition explicit: under the fund's downside case, the maintenance covenants must keep a cushion of at least 25% in every year. The lenders will only provide debt with both a leverage covenant and an interest-cover covenant. The partner wants the management case used as both the base case and the bank case, and asks you three questions: how you would finance the deal, whether the fund can pay the asking price and still earn its hurdle, and what the fund should put to the founder.
This case requires paid access.
Starting files
Solution files
This case costs £19 and is available to customers with an active £499 membership.
Get Alpha