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Upper Mid-Market Private Equity Fund
An independent practice case, not supplied or endorsed by the named firm.
Complete a three-tranche LBO for an industrial distributor, with floating-rate debt, circular interest and a cash sweep.
Complete a three-tranche LBO for an industrial distributor, with floating-rate debt, circular interest and a cash sweep. You have 90 minutes and a one-sheet template. Calculate the equity cheque, returns for each exit year and sensitivities to the entry and exit multiples.
Harbourne's founding family and its management team are selling 100% of the company, and the fund has agreed a price of 9.5x next year's (2026) EBITDA. The deal closes on 31 December 2025. The sellers receive that enterprise value less Harbourne's existing debt of £150m plus its £22m of cash, and the existing debt, net of that cash, is repaid at closing. The fund will finance the purchase with a term loan and unsecured notes, keep a revolving credit facility (RCF) undrawn for working capital, and fund the rest with equity.
The investment committee wants three things from your model: the equity cheque, the fund's IRR and multiple of money (MOIC) for a five-year hold and for earlier exits, and how the five-year returns move if the fund pays more or less, or sells at a different multiple.
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