ABC LBO Model

Drivers

Scenario 2

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% 16.0%
Other noncurrent assets 31.6% 18.8% 16.8% 16.8%
Other current liabilities 10.5% 9.8% 7.4% 7.4%
Other noncurrent liabilities 22.0% 19.0% 18.0% 18.0%
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
16.0% 16.0% 16.0% 16.0% 16.0% 16.0% 16.0% 16.0% 16.0%
16.8% 16.8% 16.8% 16.8% 16.8% 16.8% 16.8% 16.8% 16.8%
7.4% 7.4% 7.4% 7.4% 7.4% 7.4% 7.4% 7.4% 7.4%
18.0% 18.0% 18.0% 18.0% 18.0% 18.0% 18.0% 18.0% 18.0%
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 2

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

Revenue 65,224 69,657 78,782 86,661 95,327
y-o-y growth 7% 13% 10% 10%
Cost of goods sold (28,649) (37,549) (41,434) (43,453) (47,798)
% of revenue -44% -54% -53% -50% -50%
Gross profit 36,574 32,108 37,349 43,208 47,529
% margin 56% 46% 47% 50% 50%
Operating expenses (14,046) (19,233) (23,019) (22,637) (24,901)
% of revenue -22% -28% -29% -26% -26%
EBITDA 22,528 12,874 14,330 20,571 22,628
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
104,859 112,200 120,053 128,457 134,880 141,624 147,289 151,708
10% 7% 7% 7% 5% 5% 4% 3%
(52,578) (56,258) (60,196) (64,410) (67,630) (71,012) (73,852) (76,068)
-50% -50% -50% -50% -50% -50% -50% -50%
52,282 55,941 59,857 64,047 67,250 70,612 73,437 75,640
50% 50% 50% 50% 50% 50% 50% 50%
(27,391) (29,309) (31,360) (33,555) (35,233) (36,995) (38,475) (39,629)
-26% -26% -26% -26% -26% -26% -26% -26%
24,891 26,633 28,497 30,492 32,017 33,617 34,962 36,011
Balance sheet

Selected case 2

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

Cash 6,880 19,866 8,820 8,820
Trade receivables 7,824 9,112 7,669 7,121 8,436 9,280
Inventory 8,632 10,495 10,326 9,528 10,829 11,912
Other current assets 12,396 13,102 12,618 12,618 13,879 15,267

Capitalized financing costs - - - 3,550

PP&E 27,028 29,171 31,011 35,226
Goodwill - - - 136,927
Other noncurrent assets 20,614 13,095 13,248 13,248 14,572 16,030

Total assets 83,373 94,841 83,692 227,038

Trade payables 5,815 6,256 7,474 7,474 7,838 8,622

Other current liabilities 6,824 6,858 5,837 5,837 6,421 7,063

Financial debt 5,462 10,065 8,532 160,000

Other noncurrent liabilities 14,342 13,210 14,145 14,145 15,560 17,115

Shareholders' equity 50,930 58,452 47,704 39,582

Total liabilities & equity 83,373 94,841 83,692 227,038

Check 0.00 0.00 0.00

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

10,208 10,922 11,687 12,505 13,130 13,787 14,338 14,768

13,103 14,020 15,001 16,052 16,854 17,697 18,405 18,957
16,794 17,970 19,227 20,573 21,602 22,682 23,589 24,297

17,633 18,867 20,188 21,601 22,681 23,815 24,767 25,510

9,484 10,148 10,859 11,619 12,200 12,810 13,322 13,722

7,769 8,313 8,895 9,517 9,993 10,493 10,913 11,240

18,827 20,145 21,555 23,064 24,217 25,428 26,445 27,238

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 (187,500)
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 - - 136,927
Other noncurrent assets 13,248 13,248

Total assets 83,692 2,869 86,561 (50,573)

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 (47,704)

Total liabilities & equity 83,692 - 83,692 (47,704)

Financing Financing fees Refinance debt Target BS post deal
203,519 (7,488) (8,532) 8,820
7,121
9,528
12,618
-
3,550 3,550
35,226
136,927
13,248

203,519 (3,938) (8,532) 227,038

7,474
5,837
-
160,000 (8,532) 160,000
14,145
-
43,519 (3,938) 39,582

203,519 (3,938) (8,532) 227,038

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
Working capital

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

Trade receivables 7,824 9,112 7,669 7121.17 8,436 9,280
Inventory 8,632 10,495 10,326 9527.698 10,829 11,912
Trade payables 5,815 6,256 7,474 7474.086 7,838 8,622
Net trade working capital 10,641 13,351 10,521 9,175 11,427 12,569

DSO 43.8 47.7 35.5 35.5 35.5

DIO 110.0 102.0 91.0 91.0 91.0
DPO 74.1 60.8 65.8 65.8 65.8
Net cycle 79.7 88.9 60.7 60.7 60.7
2025F 2026F 2027F 2028F 2029F 2030F 2031F 2032F
10,208 10,922 11,687 12,505 13,130 13,787 14,338 14,768
13,103 14,020 15,001 16,052 16,854 17,697 18,405 18,957
9,484 10,148 10,859 11,619 12,200 12,810 13,322 13,722
13,826 14,794 15,830 16,938 17,785 18,674 19,421 20,003

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
65.8 65.8 65.8 65.8 65.8 65.8 65.8 65.8
60.7 60.7 60.7 60.7 60.7 60.7 60.7 60.7