WSO - PE Guide - Paper LBO Example 3 VF2

There is a cash-fow generatng business in a declining indusry ha we are poentally ineresed in. I has 'e e(pec revenue o decline a a -).*+ ,%R and /argins will re/ain wih he e(cepton o so/e coss In year  we believe we can a0e a0e ou $*M in cos and ha 1gure will grow o $*M or years years )-*. iven h 2% 3$)!M per year4 is e(peced o be higher han ,ape( 3$!M per year4 year4 and 5', re6uire/ens re6uire/ens will no 'e believe we can buy his business or 7.*( LTM "#IT% bu only e(i a 7( LTM "#IT%. 8ur ban0ers have have old us we can 1nance he ac6uisiton wih 9*+ deb a an average cos o deb o !+. 'ha is he reurn on his poental deal and would you do i:

LTM Revenues o $!!M and "#IT% o $&!M. e believe we can a0e ou o he business. e declining naure o he indusry  change during our hold period. The relevan a( rae is &*+.

NOTE: To watch sample video soluon, COPY and PASTE the link below into ou! b!owse! when ou a!e lo""e

hCp>DDwww.wallsreeoasis.co/Dpre/iu/-videoDpaper-lbo-e(a/ple-&-privae-e6uiy-inerview-prep-pac0 Assumpons

LTM Revenue LTM "#IT% "nry Multple + eb ,os o eb Ta( Rae Revenue rowh ,os ;avings 3
$!!.! $&!.! 7.*( 9*.!+ !.!+ &*.!+ 3).*+4 *.! *.! 7.!( $)!.! $!.! $!.!

Ent! Calculaon

LTM "#IT% ( "nry Multple "nry T"= Less> eb "nry "6uiy Yea!

$&!.! 7.*( $&*.! 3$?@.?4 $7@.& +

$% ou do not have access to the #SO &ideo 'ib!a!, e(mail $v)wallst!eetoasis*com ou! use!name %o!

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0

$ncome Statement

Revenue

$!!.!

$A@.*

$A*.

$A).@

$A!.7

$??.

(2.5%)

(2.5%)

(2.5%)

(2.5%)

(2.5%)

$&!.!

$)A.&

$)?.*

$)@.?

$)@.

$)9.7

30.0%

30.0%

30.0%

30.0%

30.0%

30.0%

-

5.0

15.0

15.0

15.0

15.0

&!.!

&7.&

7&.*

7).?

7).

7.7

30.0%

35.1%

45.8%

46.2%

46.6%

47.0%

3$)!.!4 $7.)* 3$?.@?4 $*.* 3$.A4 $&.9

3$)!.!4 $)&.*) 3$?.@?4 $7.@ 3$*.)4 $A.9

3$)!.!4 $)).? 3$?.@?4 $7.! 3$7.A4 $A.

3$)!.!4 $)). 3$?.@?4 $&.& 3$7.@4 $?.@

3$)!.!4 $).7& 3$?.@?4 $).@ 3$7.74 $?.)

% Growth

"#IT% % Margin Cost Savings

"#IT% 3%dB.4 % Margin

Less> 2% "#IT Less> Ineres "#T Less> Ta(es 5e Inco/e

Cash 1low

5e Inco/e Elus> 2% Less> ,ape( Less> ,hange in 5', Levered ,ash Flow ,u/ulatve ,ash Flow

$&.9 $)!.! 3$!.!4 $!.! $&.9 $&.9

E2it Calculaon

LTM "#IT% ( "(i Multple T"= Elus> ,ash eneraed Less> eb "(i "6uiy 3O$C $44

$7.7 7.!( $9*.@ $?A.) 3$?@.?4 $9@. .*02 -5*67

$A.9 $)!.! 3$!.!4 $!.! $A.9 $&&.

$A. $)!.! 3$!.!4 $!.! $A. $*).&

$?.@ $)!.! 3$!.!4 $!.! $?.@ $@!.A

$?.) $)!.! 3$!.!4 $!.! $?.) $?A.)

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