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Mid-Market Private Equity Fund
An independent practice case, not supplied or endorsed by the named firm.
Build a volume-led LBO for an oat-drink producer, adjusting reported EBITDA before setting the purchase price and debt.
Build a volume-led LBO for an oat-drink producer, adjusting reported EBITDA before setting the purchase price and debt. You have 90 minutes and a blank spreadsheet. Forecast litres sold, prices and costs, then calculate cash flow, debt repayment and equity returns.
Halcombe's audited accounts for 2025 have just arrived. The fund has agreed to buy the business on a cash-free, debt-free basis at 8.0x 2025 adjusted EBITDA. For modelling purposes, assume completion on 31 December 2025, so 2025 is the last year before the fund's ownership and 2026 the first year of the plan. The purchase is financed with a senior term loan and equity from the fund, with a revolving credit facility (RCF) alongside, undrawn at completion. The management team receives options over part of the equity gain.
The deal team needs a working model quickly. How much equity does the fund have to write, how fast does Halcombe pay down its debt, how comfortable are the credit statistics, and what does the fund earn if it sells at the end of 2030?
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