ABC LBO Model

Drivers

Scenario 1

Target ABC
ABC share price 150
Fully diluted shares outstanding 1,000,000
Acquisition premium 25%
Fiscal year end 31-Dec
LBO date 12/31/2022
First forecast year 2023
Days in year 365
Currency $
Reporting units 000s
Domestic country Italy
Tax rate 27%
Minimum cash balance 8,000
Deviation 2%

FV adjustments:
Trade receivables (548)
Inventory (798)
PP&E 4,215

Scenario 1: Optimistic case 2020A 2021A 2022A 2023F

Revenue 12%
Cost of goods sold -48%
Operating expenses -24%
DSO 35.5
DIO 91.0
DPO 65.8
Other current assets 16%
Other noncurrent assets 17%
Other current liabilities 7%
Other noncurrent liabilities 18%
Capex % of revenue 5%

Scenario 2: Base case 2020A 2021A 2022A 2023F

Revenue 7% 13% 10%
Cost of goods sold -44% -54% -53% -50%
Operating expenses -22% -28% -29% -26%
DSO 43.8 47.7 35.5 35.5
DIO 110.0 102.0 91.0 91.0
DPO 74.1 60.8 65.8 65.8
Other current assets 19.0% 18.8% 16.0% 16%
Other noncurrent assets 31.6% 18.8% 16.8% 17%
Other current liabilities 10.5% 9.8% 7.4% 7%
Other noncurrent liabilities 22.0% 19.0% 18.0% 18%
Capex % of revenue 5.2% 4.7% 5%

Scenario 3: Worst case 2020A 2021A 2022A 2023F

Revenue 8%
Cost of goods sold -52%
Operating expenses -28%
DSO 35.5
DIO 91.0
DPO 65.8
Other current assets 16%
Other noncurrent assets 17%
Other current liabilities 7%
Other noncurrent liabilities 18%
Capex % of revenue 5%
2024F 2025F 2026F 2027F 2028F 2029F 2030F 2031F 2032F
12% 12% 9% 9% 9% 7% 7% 6% 5%
-48% -48% -48% -48% -48% -48% -48% -48% -48%
-24% -24% -24% -24% -24% -24% -24% -24% -24%
35.5 35.5 35.5 35.5 35.5 35.5 35.5 35.5 35.5
91.0 91.0 91.0 91.0 91.0 91.0 91.0 91.0 91.0
65.8 65.8 65.8 65.8 65.8 65.8 65.8 65.8 65.8
16% 16% 16% 16% 16% 16% 16% 16% 16%
17% 17% 17% 17% 17% 17% 17% 17% 17%
7% 7% 7% 7% 7% 7% 7% 7% 7%
18% 18% 18% 18% 18% 18% 18% 18% 18%
5% 5% 5% 5% 5% 5% 5% 5% 5%

2024F 2025F 2026F 2027F 2028F 2029F 2030F 2031F 2032F

10% 10% 7% 7% 7% 5% 5% 4% 3%
-50% -50% -50% -50% -50% -50% -50% -50% -50%
-26% -26% -26% -26% -26% -26% -26% -26% -26%
35.5 35.5 35.5 35.5 35.5 35.5 35.5 35.5 35.5
91.0 91.0 91.0 91.0 91.0 91.0 91.0 91.0 91.0
65.8 65.8 65.8 65.8 65.8 65.8 65.8 65.8 65.8
16% 16% 16% 16% 16% 16% 16% 16% 16%
17% 17% 17% 17% 17% 17% 17% 17% 17%
7% 7% 7% 7% 7% 7% 7% 7% 7%
18% 18% 18% 18% 18% 18% 18% 18% 18%
5% 5% 5% 5% 5% 5% 5% 5% 5%

2024F 2025F 2026F 2027F 2028F 2029F 2030F 2031F 2032F

8% 8% 5% 5% 5% 3% 3% 2% 1%
-52% -52% -52% -52% -52% -52% -52% -52% -52%
-28% -28% -28% -28% -28% -28% -28% -28% -28%
35.5 35.5 35.5 35.5 35.5 35.5 35.5 35.5 35.5
91.0 91.0 91.0 91.0 91.0 91.0 91.0 91.0 91.0
65.8 65.8 65.8 65.8 65.8 65.8 65.8 65.8 65.8
16% 16% 16% 16% 16% 16% 16% 16% 16%
17% 17% 17% 17% 17% 17% 17% 17% 17%
7% 7% 7% 7% 7% 7% 7% 7% 7%
18% 18% 18% 18% 18% 18% 18% 18% 18%
5% 5% 5% 5% 5% 5% 5% 5% 5%
P&L

Selected case 1

$ 000s 2020A 2021A 2022A 2023F 2024F

Revenue 65,224 69,657 78,782
y-o-y growth 7% 13%
Cost of goods sold (28,649) (37,549) (41,434)
% of revenue -44% -54% -53%
Gross profit 36,574 32,108 37,349
% margin 56% 46% 47%
Operating expenses (14,046) (19,233) (23,019)
% of revenue -22% -28% -29%
EBITDA 22,528 12,874 14,330
D&A (1,338) (1,510) (1,870)
EBIT 21,191 11,364 12,459
Interest expenses (238) (282) (225)
EBT 20,953 11,082 12,234
Taxes (3,116) (3,561) (3,116)
Net income 17,837 7,521 9,118
2025F 2026F 2027F 2028F 2029F 2030F 2031F 2032F
Balance sheet

Selected case 1

$ 000s 2020A 2021A 2022A Closing 2023F 2024F

Cash 6,880 19,866 8,820
Trade receivables 7,824 9,112 7,669
Inventory 8,632 10,495 10,326
Other current assets 12,396 13,102 12,618

Capitalized financing costs - - -

PP&E 27,028 29,171 31,011
Goodwill - - -
Other noncurrent assets 20,614 13,095 13,248

Total assets 83,373 94,841 83,692

Trade payables 5,815 6,256 7,474

Other current liabilities 6,824 6,858 5,837

Financial debt 5,462 10,065 8,532

Other noncurrent liabilities 14,342 13,210 14,145

Shareholders' equity 50,930 58,452 47,704

Total liabilities & equity 83,373 94,841 83,692

Check 0.00 0.00 0.00

2025F 2026F 2027F 2028F 2029F 2030F 2031F 2032F
Valuation

Current ABC share price 150

Acquisition premium 25%
Price per share at transaction 187.5
Fully diluted shares outstanding 1,000,000
Equity at transaction 187,500
Net debt (289)
Enterprise value 187,211

EBITDA 14,330
EV/EBITDA entry multiple 13.1
Transaction fees

$ 000s 2020A 2021A 2022A 2023F 2024F

Capitalized financing costs opening
Increase in capitalized financing costs
Amortization
Capitalized financing costs ending - - - - - -

Expensed fees (3,938)

Capitalized fees (3,550)

M&A / Sponsor fees

Investment bank fee 0.80% of Transaction value excluding fees & expenses
Sponsor fee 0.80% of Transaction value excluding fees & expenses

Debt financing
Senior note 2.50% of Total principal amount
Term A 2.25% of Total principal amount
Term B 2.00% of Total principal amount

Legal fees 0.50% of Transaction value excluding fees & expenses

2025F 2026F 2027F 2028F 2029F 2030F 2031F 2032F

- - - - - - - -

Fees Notes Amort. Period Amount

(1,500) Expensed 0 187,500
(1,500) Expensed 0 187,500

(1,000) Capitalized 40,000

(1,350) Capitalized 60,000
(1,200) Capitalized 60,000

(938) Expensed 0 187,500

Sources & Uses of funds

Sources of Funds Uses of Funds

Excess cash - Acquisition price
Senior note 40,000 Refinance existing debt
Term A 60,000 Fees & expenses
Term B 60,000
Common equity 43,519

Total 203,519 Total

187,500
8,532
7,488

203,519
Balance Sheet@Transaction

$ 000s BS prior deal FV adj. Fair Value Transaction settlement

Cash 8,820 8,820
Trade receivables 7,669 (548) 7,121
Inventory 10,326 (798) 9,528
Other current assets 12,618 12,618
-
Capitalized financing costs - -
PP&E 31,011 4,215 35,226
Goodwill - -
Other noncurrent assets 13,248 13,248

Total assets 83,692 2,869 86,561 -

Trade payables 7,474 7,474

Other current liabilities 5,837 5,837
-
Financial debt 8,532 8,532
Other noncurrent liabilities 14,145 14,145
-
Shareholders' equity 47,704 47,704

Total liabilities & equity 83,692 - 83,692 -

Financing Financing fees Refinance debt Target BS post deal
8,820
7,121
9,528
12,618
-
-
35,226
-
13,248

- - - 86,561

7,474
5,837
-
8,532
14,145
-
47,704

- - - 83,692
Goodwill

Equity purchase price 187,500

Net book value of assets (47,704)
Excess purchase price 139,796
Fair value adjustments (2,869)
Goodwill 136,927
Fixed assets roll forward

$ 000s 2020A 2021A 2022A Closing 2023F

PP&E Opening 27,028 29,171
Capex 3,653 3,711
Depreciation (1,510) (1,870)
PP&E Ending 27,028 29,171 31,011

Goodwill Opening
Increase Goodwill
Impairment
Goodwill Ending

Assumption
Capex depreciation 10 years

Depreciation schedule 1
Depreciation year 1
Depreciation year 2
Depreciation year 3
Depreciation year 4
Depreciation year 5
Depreciation year 6
Depreciation year 7
Depreciation year 8
Depreciation year 9
Depreciation year 10
Total Depreciation

Amortization - transaction fees 1

Amortization

Total D&A
2024F 2025F 2026F 2027F 2028F 2029F 2030F

2 3 4 5 6 7 8

2 3 4 5 6 7 8
2031F 2032F

9 10

9 10