TOC Sheet Tab Description Author

1 TOC
2 Summary
3 Model
4 Waterfall Chart
5 Integrity
6 Rachet Example
7 Goodwill Example
8 Sheet2
9 Index

File Name:
C:\Courses\Course Materials\3 Templates and Exercises M&A Models\LBO Shell.xls

Colour Codes
Summary
EBITDA Scenario Base Case
Sensitivty Factor 100% Cas
7,000.00
EBITDA 3,200.00
6,000.00

Sources and Uses Map Amount vs EBITDA Pct IRR Break Even 5,000.00
4,000.00
Senior Debt 15,000 4.69 39.1% 7.3% 22.5% 3,000.00
Mezzenaine Debt 15,000 4.69 39.1% 10.0% 47.5%
2,000.00
Investor Equity 8,351 2.61 21.8% 20.2% 70.0%
1,000.00
Mangement Equity 0 - 0.0% 0.0% 0.0%
Total 38,351 11.98 100.0% -
1 2 3
Entry Multiple EV/EBITDA 12.00
Transaction Price 38,400
Entry Multip
14% Senior Debt/
Exit Multiple EV/EBIDA 7.00
12%
E10%
Project IRR 11.86%
q
WACC 11.00% u 8%
Economic Return 0.86% i 6%
t
Apply Vol 4%
Holding Period 9.00 y
2%
I 0%
Volatility 22% R

80%
75%
70%
65%
60%
55%
Model Verified 1 R
100 100
 Cash Flow Waterfall Equity Cash Flows
Junior
7,000.00 50,000.0
Debt
6,000.00 S ervice 40,000.0
5,000.00 S enior
30,000.0
S weep
4,000.00 20,000.0
S enior
3,000.00 Debt
10,000.0
S ervice
2,000.00
Cas h -
1,000.00 Flow 1 2 3 4 5 6 7 8 9 10 11 12
(10,000.0)
-
(20,000.0)
1 2 3 4 5 6 7 8 9 10 11 12

Entry Multiple 11.50 Exit Multiple 8.60 J-Curve

Equity IRR
14% Senior Debt/Capital 45.2% Mezz Debt 36% Entry Multiple 12.00 Exit Multiple 7
12%
25.00%
Senior Debt/Capital 49.5%
E10% Equity
q IRR 20.00%
u 8% Junior
i 6% IRR 15.00%
t S enior
4% 10.00%
y IRR
2% 5.00%
I 0%
R 0.00%
5%
0%
40%
80%
75%
70%
65%
60%
55%
50%
45%

35%
30%
25%
20%
15%
10%

R
EBITDA Sensitivty -5.00% 1 2 3 4 Holding
5 6Period
7 8 9 10
ash Flows

7 8 9 10 11 12 13

urve
0 Exit Multiple 7.50
Capital 49.5%

7
Period 8 9 10
Model Equity IRR 20.2%
Model Verfied 1 Mezz IRR 10.0%
Base Case
Entry Multiple 12.00
Exit Multiple 7.00
0 1 2

Transaction Inputs
Operating Inputs

Current EBITDA 3,200.00

EV/EBITDA Multiple 12 120

Enterprise Value 38,400.00

Holding Period 9.00

Exit Multiple 7.00 75

Apply Volatility 0 Volatility

Volatility 22% 22

Finaning Inputs

Arrangement Fees 1.50%

Total Fees 576.00

Cash of Target Used 2,000.00

Management Inventive
Hurdle Rate 25%
Pct of Excess 15%

Debt Inputs

Senior Debt Issued 15,000.0

Grace Period (Years) 1

Repayment Period (Years) 6
Interest Rate 7.30% 7.30% 7.30% 7.30%

Debt Service Revere Acct Months 0

Debt Service Reserve Intrest Rate 6.50%
Minimum Debt Service Reserve 0

Cash Sweep Covenant (DSCR) 1.2

 Interest Rate Increase Trigger 1.1
Increased Interest Rate 7.80%

Debt Fees 1.00%

Mezzanine Debt Issued 15,000.00

Interest Capitalised 0
Interest Rate 0.1 10.00% 10.00% 10.00%

Fees 0.015
Equity Kicker

Cash Sweep Table DEBT/EBITDA

From To Percent
5.00 100%
5.00 3.00 75%
3.00 2.50 50%
2.50 0.00 0%
Stanby Equity

Commitment 1,000
Term of Commitment (yrs) 1
Trigger - DSCR 1

Interest Income Rate 0.03

Tax and Other Assumptions

Book Depreciation 0.1

Tax Depreciation 0.12

Income Tax Rate 0.275 27.50% 27.50% 27.50%

Amortisation Rate 0.2

EBITDA Margin 0.32

DOS - Debtors 60.00 60.00 60.00 60.00 60.00

DOS - Expense 40.00 40.00 40.00 40.00 40.00

Retirments 200 200

Operating Inputs

EBITDA Sensitivity Factor 100% 100

Base Case
EBITDA Growth
Base Case 5% 7%
Downside Case 2% 2%
Upside Case 8% 9%
Base Case 5% 7%
 Captial Expenditure 500.00 100.00

Working Section

Base EBITDA 3,200.00 3,200.00 3,200.00

Growth Index 1.00 1.05 1.12
Sensitivity Factor 100% 100% 100%

Volatility Applied - - -
Volatility Factor 1.00 1.17 1.41

EBITDA 3,200.0 3,360.0 3,595.2

Terminal Procceeds 0 0 0

Revenues - 10,500 11,235

DOS - Debtors 60 60 60
Percent of Revenues 16% 16% 16%
Debtor Balance 1,000.00 1,726.03 1,846.85

DOS- Creditors 40.00 40.00 40.00

Pct of Revenues 11.0% 11.0%
Creditor Balance 1,000.00 1,150.68 1,231.23

Trade Working Capital 0.00 575.34 615.62

Change in Working Capital 575.34 40.27

Uses and Sources of Funds

Uses of Funds
Acquisition of Target 38,400.0
Arrangement Fees 576.0
Debt Fees 375.0
Debt Service Reserve Account -
Standby Equity 1,000.0
Total Uses of Funds 40,351.0

Sources of Funds
Cash of Target 2,000.0
Senior Debt 15,000.0
Mezzanine Debt 15,000.0
Investor Equity 8,351.0
Management Team Rachet
Total Sources of Funds 40,351.0

Source and Use Check 1.0

Goodwill
 Purchase Price of Equity 38,400
Less: Existing Equity on Books 6,500
Net Value 31,900
Less: Asset Write-ups 500
Less: Debt Write-downs -
Add: Consulting and Legal Fees 576
Goodwill 31,976

Pro-Forma Balance Sheet

Assets Opening Write-up Issue Debt Cash
Cash 5,000 (2,000.0)
Debt Service Reserve Acct -
Stand-by Equity Deposit 1,000.0
Trade Debtors 1,000
Fixed Assets 1,500 500
Unamortised Fees
Goodwill 31,976
Total 7,500

Senior Debt 15,000.0

Mezzanine Debt 15,000.0
Payables 1,000
Equity 6,500
Total 7,500

Pro-Forma Check

Debt Schedule
Term 6

Senior Debt
Total Debt Balance 15,000 15,000 15,000

Opening Balance - 15,000 13,934

Add: Debt Draws 15,000 - -
Less: Scheduled Repayments - - 2,500
Less: Prepayments from Sweep 1,066 -
Add: Defaults on Debt - - 221
Less: Repayments of Default - -
Less: Repayment at Terminal Date - - -
Closing Balance 15,000 13,934 11,655

Debt Fees 150

Interest Rate 7.30% 7.30% 7.30%

Interest Expense - 1,095 1,017

Mezzanine Debt
Capitalise Interest 0.00%
 Total Debt Balance

Opening Balance 0 15000 16500

Add: Debt Draws 15000 0 0
Add: Capatilised Interest 0 0 0
Less: Prepayments from Sweep
Add: Defaults on Debt - 1,500.00 3,150.00
Less: Repayments of Default - 1,500.00
Less: Scheduled Repayments 0 0 0
Closing Balance 15,000.00 16,500.00 18,150.00

Debt Fee Percent 1.50% 0.00% 0.00%

Debt Fees 225.00 - -

Interest Rate 10.00% 10.00% 10.00%

Interest Expense - 1,500.00 1,650.00
Interest Paid - 1,500.00 1,650.00

Debt Service Reserve Account

Debt Service Reserve Months 0

Total Senior Debt Service 0 1095 3517.1888

Required Balance in Account 0 0 0

Opening Balance - - -
Add: Inflows from Initial Cash - - -
Less: Payment of Debt Service - - -
Add: New Inflows - - -
Closing Balance - - -

Interest Income Rate 6.50% 6.50% 6.50%

Interest Income - - -

Plant Assets and Fee Amortisation

Plant Assets
Opening Balance 2,000 2,300
Add: Cap Exp 500 100
Less: Retirements 200 200
Less: Book Value when Sell 0 0
Closing Balance 2,000 2,300 2,200

Book Depreciation Rate 10.00% 10.00% 10.00%

Tax Depreciation Rate 12.00% 12.00% 12.00%

Book Depreciation Charge - 200 230

Tax Depreciation Charge - 240 276
 Accumulated Depreciation
Opening Balance - -
Add: Depreciation Charge 200 230
Less: Retirements 200 200
Less: Book Value when Sell - -
Closing Balance - - 30

Debt Financing Fees

Opening Balance 375 375
Add: Fees
Closing Balance 375 375 375

Amortisation Rate 20.00% 20.00%

Amortisation 75.00 75.00

Accumlated Amortisation - 75 150

Net Unamortised Fees 300 225

Sale Proceeds - - -
Less: Net Book Value - - -
Gain on Sale - - -

Net Book Value 2,000 2,300 2,170

Profit and Loss

EBITDA 0 3360 3595.2

Add: Gain on Sale at Terminal Year 0 0 0
Less: Depreciation - 200.00 230.00
EBIT - 3,160.00 3,365.20
Less: Interest Expense on Senior 0 1095 1017.1888
Less: Interest Expense on Junior 0 1500 1650
Add: Interest Income 0 0 0
Less: Fee Amortisation 0 75 75
EBT - 490.00 623.01
Less: Book Taxes 0 134.75 171.32809
Earnings - 355.25 451.68

Tax Paid and Deferred Tax

Book EBT 0 490 623.01125

Less: Tax Depreciation 0 40 46
Less: Gain on Sale 0 0 0
Adjusted EBT - 450.00 577.01

NOL Balance
Opening Balance 0 0 0
Add: Tax Loss 0 0 0
Less: Withdrawls 0 0 0
Closing Balance - - -
 Taxable Income - 450.00 577.01

Tax Rate 27.50% 27.50% 27.50%

Taxes Paid - 123.75 158.68
Less: Book Taxes - 134.75 171.33
Change in Deferred Taxes - 11.00 12.65

Accumulated Deferred Tax

Opening Balance 0 0 11
Add: Deferred Tax Change 0 11 12.65
Closing Balance 0 11 23.65

Cash Flow
EBITDA 0 3360 3595.2
Add: Interest Income 0 0 0
Add: Sale Proceeds 0 0 0
Less: WC Changes 575.34247 40.273973
Less: Cash Taxes 0 123.75 158.67809
Operaing Cash Flow - 2,660.91 3,396.25
Less: Capital Expenditures 38400 500 100
Cash after Cap Exp (38,400.00) 2,160.91 3,296.25
Add: New Senior Debt 15000
Add: New Mezz Debt 15000
Add: Senior Debt From Transaction
Add: Equity Issued 8351
Less: Debt Fees and Other Fees 951
Less: Stanby Equity 1000
Less: DSCRA Inflows 0 0 0
Plus: DSCRA Outflows 0 0 0
Cash for Waterfall (2,000.00) 2,160.91 3,296.25
Less: Senior Interest 0 1095 1017.1888
Less: Senior Repayment 0 0 2500
Less: Repayment of Default 0 0 0
Cash before Senior Sweep (2,000.00) 1,065.91 (220.94)
Less: Pre-payments from Sweep 0 1065.9075 0
Cash Flow after Senior Debt (2,000.00) - (220.94)
Add: Defatult on Senior Debt 0 220.94082
Cash Flow to Junior Debt - -
Less: Junior Cash Interest 0 1500 1650
Less: Junior Repayment 0 0 0
Less: Repayment of Default 0 0 1500
Cash after Junior Debt (1,500.00) (3,150.00)
Add: Default on Junior 1500 3150
Net Cash Flow - -
Increase in Cash Balance 0 0
Reduction in Cash Balance 0 0
Equity Distributions - -

Cash Balance
 Opening Balance 3,000 3,000
Add: Cash Flow not Distributed - -
Less: Release after Senior Debt - -
Closing Balance 3,000 3,000.00 3,000.00

DSCR
Cash Flow for Waterfall 2,160.9 3,296.2
Debt Service 1,095.0 3,517.2
DSCR 1.9734315 0.9371826
Switch for Cash Sweep Trigger 1 0

Debt Balance for Sweep 15,000 11,434

Gross Equity IRR Before Rachet

Hurdle Rate 25% 25% 25%
FV Factor 1 1.25 1.5625
Terminal Value - -
Cash Flow for Manager Calc 0% (8,351.0) - -
Cash Flow with Hurdle Rate 25% (8,351.0) - -
Excess ot Managers - -
Percent to Managers 15% 15%
Mngr Proceeds - -

Remaining Cash to Equity Investors (8,351.0) - -

Equity IRR 20%

Cash to Senior (15,000) 2,161 3,296

Senior IRR 7.3%

Cash to Junior (15,000.00) - -

Junior IRR 10.0%

Equity Balance

Opening Balance 8,351 8,706

Add: Equity Advances
Add: Net Income 355 452
Less: Dividends 0 0
Closing Balance 8,351 8,706 9,158

Balance Sheet
Assets
Cash 3,000 3,000 3,000
Debt Service Reserve Acct 0 0 0
Stand-by Equity Deposit 1,000 1,000 1,000
Trade Debtors 1,000 1,726 1,847
Fixed Assets 2,000 2,300 2,170
Unamortised Fees 375 300 225
Goodwill 31,976 31,976 31,976
 Total 39,351 40,302 40,218

Senior Debt 15,000 13,934 11,655

Mezzanine Debt 15,000 16,500 18,150
Accumulated Deferred Tax 0 11 24
Payables 1,000 1,151 1,231
Equity 8,351 8,706 9,158
Total 39,351 40,302 40,218

0 0 0
1 1 1 1

Project IRR and Free Cash Flow 0

EBITDA - 3,360.00 3,595.20

Less; Taxes on EBIT - 869.00 925.43
Less: WC Changes - 575.34 40.27
Less: Capital Exenditures 38,400.00 500.00 100.00
Add: Deferred Tax - 11.00 12.65
Add: Terminal Proceeds - - -
Total Cash Flow (38,400.00) 1,426.66 2,542.15

Overall IRR on Free Cash Flow 11.86%

1 2
Cash Flow Cash Flow 2,160.91 3,296.25
Senior Debt Service Senior Debt 1,095.00 3,296.25
Senior Sweep Senior Swee 1,065.91 -
Junior Debt Service Junior Debt S - -

J-Curve
Entry Multip 12.00
 Equity IRR Junior IRR
80% 12.45% 10.00%
77.5% 11.12% 10.00%
75.0% 9.63% 10.00%
72.5% 7.97% 10.00%
70.0% 6.06% 10.00%
67.5% 3.83% 10.00%
65.0% 1.18% 10.00%
62.5% -2.26% 10.00%
60.0% -7.11% 10.00%
57.5% 10.00%
55.0% 9.57%
52.5% 8.49%
50.0% 7.31%
47.5% 6.02%
45.0% 4.58%
42.5% 2.97%
40.0% 1.13%
37.5% -1.02%
35.0% -3.63%
32.5% -6.97%
30.0% -11.69%
27.5%
25.0%
22.5%
20.0%
17.5%
15.0%
12.5%
10.0%
7.5%
5.0%
2.5%
0.0%
-2.5%
-5.0%
-7.5%
-10.0%
-12.5%
Hurdle 5% 5%
Match 5 14
Index 70% 48%

Equity IRR Junior IRR

80% 12% 10%
78% 11% 10%
75% 10% 10%
73% 8% 10%
70% 6% 10%
68% 4% 10%
65% 1% 10%
63% 0% 10%
60% 0% 10%
58% 0% 10%
55% 0% 10%
53% 0% 8%
50% 0% 7%
48% 0% 6%
45% 0% 5%
43% 0% 3%
40% 0% 1%
38% 0% 0%
35% 0% 0%
33% 0% 0%
30% 0% 0%
28% 0% 0%
25% 0% 0%
23% 0% 0%
20% 0% 0%
18% 0% 0%
15% 0% 0%
13% 0% 0%
10% 0% 0%
7% 0% 0%
5% 0% 0%
2% 0% 0%
0% 0% 0%
-3% 0% 0%
 Holding Per 9.00

EBITDA Sens 100%

3 4 5 6 7 8 9 10

7.30% 7.30% 7.30% 7.30% 7.30% 7.30% 7.30% 7.30%

10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%

27.50% 27.50% 27.50% 27.50% 27.50% 27.50% 27.50% 27.50%

60.00 60.00 60.00 60.00 60.00 60.00 60.00 60.00

40.00 40.00 40.00 40.00 40.00 40.00 40.00 40.00

200 200 100 100 100 100 100 100

9% 25% 15% 23% 5% 2% 2% 2%

4% 4% 1% 1% 1% 1% 1% 1%
10% 25% 10% 10% 5% 3% 3% 3%
9% 25% 15% 23% 5% 2% 2% 2%
 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

3,200.00 3,200.00 3,200.00 3,200.00 3,200.00 3,200.00 3,200.00 3,200.00

1.22 1.53 1.76 2.17 2.27 2.32 2.37 2.41
100% 100% 100% 100% 100% 100% 100% 100%

- - - - - - - -
1.46 1.59 2.21 2.56 3.14 3.24 3.42 3.63

3,918.8 4,898.5 5,633.2 6,928.9 7,275.3 7,420.8 7,569.2 7,720.6

0 0 0 0 - 0 52984.666 0

12,246 15,308 17,604 21,653 22,735 23,190 23,654 -

60 60 60 60 60 60 60 60
16% 16% 16% 16% 16% 16% 16% 16%
2,013.07 2,516.33 2,893.78 3,559.35 3,737.32 3,812.07 0.00 0.00

40.00 40.00 40.00 40.00 40.00 40.00 40.00 40.00

11.0% 11.0% 11.0% 11.0% 11.0% 11.0% 11.0% 11.0%
1,342.04 1,677.55 1,929.19 2,372.90 2,491.55 2,541.38 0.00 0.00

671.02 838.78 964.59 1,186.45 1,245.77 1,270.69 0.00 0.00

55.41 167.76 125.82 221.86 59.32 24.92 -1,270.69 0.00

New Equity Target Eq Debt Fees Adj Total
(2,000) 3,000
- 0
1,000 1,000
- 1,000
500 2,000
375.0 375 375
31,976 31,976
31,851 39,351

15,000 15,000
15,000
- 1,000
8,351.0 -6,500 1,851 8,351
31,851 39,351

15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000

11,655 8,994 5,547 1,292 - - - -

- - - - - - - -
2,500 2,500 2,500 1,292 - - - -
- 887 1,755 - - - - -
60 - - - - - - -
221 60 - - - - - -
- - - - - - - -
8,994 5,547 1,292 - - - - -

7.30% 7.30% 7.30% 7.30% 7.30% 7.30% 7.30% 7.30%

851 657 405 94 - - - -
 18150 19965 21961.5 24157.65 22501.8611 18951.965 15004.802 0
0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0

4,965.00 6,961.50 9,157.65 7,501.86 3,951.97 4.80 - -

3,150.00 4,965.00 6,961.50 9,157.65 7,501.86 3,951.97 4.80 -
0 0 0 0 0 0 15000 0
19,965.00 21,961.50 24,157.65 22,501.86 18,951.97 15,004.80 - -

0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

- - - - - - - -

10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%

1,815.00 1,996.50 2,196.15 2,415.77 2,250.19 1,895.20 1,500.48 -
1,815.00 1,996.50 2,196.15 2,415.77 2,250.19 1,895.20 1,500.48 -

3350.8174 3156.5492 2904.947954 1386.2933 0 0 0 0

0 0 0 0 0 0 0 0

- - - - - - - -
- - - - - - - -
- - - - - - - -
- - - - - - - -
- - - - - - - -

6.50% 6.50% 6.50% 6.50% 6.50% 6.50% 6.50% 6.50%

- - - - - - - -

2,200 2,100 2,000 2,000 2,000 2,000 2,000 0

100 100 100 100 100 100 100 0
200 200 100 100 100 100 100 0
0 0 0 0 0 0 2,000 0
2,100 2,000 2,000 2,000 2,000 2,000 0 0

10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%

12.00% 12.00% 12.00% 12.00% 12.00% 12.00% 12.00% 12.00%

220 210 200 200 200 200 200 -

264 252 240 240 240 240 240 -
 30 50 60 160 260 360 460 -
220 210 200 200 200 200 200 -
200 200 100 100 100 100 100 -
- - - - - - 560 -
50 60 160 260 360 460 - -

375 375 375 375 375 375 375 375

375 375 375 375 375 375 375 375

20.00% 20.00% 20.00% 0.00% 0.00% 0.00% 0.00% 0.00%

75.00 75.00 75.00 - - - - -

225 300 375 375 375 375 375 375

150 75 - - - - - -

- - - - - - 52,985 -
- - - - - - 1,440 -
- - - - - - 51,545 -

2,050 1,940 1,840 1,740 1,640 1,540 - -

3918.768 4898.46 5633.229 6928.8717 7275.31525 7420.8216 7569.238 0

0 0 0 0 0 0 51544.666 0
220.00 210.00 200.00 200.00 200.00 200.00 200.00 -
3,698.77 4,688.46 5,433.23 6,728.87 7,075.32 7,220.82 58,913.90 -
850.81743 656.5492 404.9479538 94.314456 0 0 0 0
1815 1996.5 2196.15 2415.765 2250.18611 1895.1965 1500.4802 0
0 0 0 0 0 0 0 0
75 75 75 0 0 0 0 0
957.95 1,960.41 2,757.13 4,218.79 4,825.13 5,325.63 57,413.42 -
263.43641 539.11297 758.2110377 1160.1679 1326.91051 1464.5469 15788.692 0
694.51 1,421.30 1,998.92 3,058.62 3,498.22 3,861.08 41,624.73 -

957.95057 1960.4108 2757.131046 4218.7922 4825.12914 5325.6251 57413.424 0

44 42 40 40 40 40 40 0
0 0 0 0 0 0 51544.666 0
913.95 1,918.41 2,717.13 4,178.79 4,785.13 5,285.63 5,828.76 -

0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0
- - - - - - - -
 913.95 1,918.41 2,717.13 4,178.79 4,785.13 5,285.63 5,828.76 -

27.50% 27.50% 27.50% 27.50% 27.50% 27.50% 27.50% 27.50%

251.34 527.56 747.21 1,149.17 1,315.91 1,453.55 1,602.91 -
263.44 539.11 758.21 1,160.17 1,326.91 1,464.55 15,788.69 -
12.10 11.55 11.00 11.00 11.00 11.00 14,185.78 -

23.65 35.75 47.3 58.3 69.3 80.3 91.3 14277.083

12.1 11.55 11 11 11 11 14185.783 0
35.75 47.3 58.3 69.3 80.3 91.3 14277.083 14277.083

3918.768 4898.46 5633.229 6928.8717 7275.31525 7420.8216 7569.238 0

0 0 0 0 0 0 0 0
0 0 0 0 0 0 52984.666 0
55.405479 167.75548 125.8166096 221.85662 59.3225314 24.915463 -1270.6886 0
251.33641 527.56297 747.2110377 1149.1679 1315.91051 1453.5469 1602.9084 0
3,612.03 4,203.14 4,760.20 5,557.85 5,900.08 5,942.36 60,221.68 -
100 100 100 100 100 100 100 0
3,512.03 4,103.14 4,660.20 5,457.85 5,800.08 5,842.36 60,121.68 -

0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0
3,512.03 4,103.14 4,660.20 5,457.85 5,800.08 5,842.36 60,121.68 -
850.81743 656.5492 404.9479538 94.314456 0 0 0 0
2500 2500 2500 1291.9788 0 0 0 0
220.94082 59.732132 0 0 0 0 0 0
(59.73) 886.86 1,755.25 4,071.55 5,800.08 5,842.36 60,121.68 -
0 886.86022 1755.253399 0 0 0 0 0
(59.73) - - 4,071.55 5,800.08 5,842.36 60,121.68 -
59.732132 0 0 0 0 0 0 0
- - - 4,071.55 5,800.08 5,842.36 60,121.68 -
1815 1996.5 2196.15 2415.765 2250.18611 1895.1965 1500.4802 0
0 0 0 0 0 0 15000 0
3150 4965 6961.5 9157.65 7501.86111 3951.965 4.8023117 0
(4,965.00) (6,961.50) (9,157.65) (7,501.86) (3,951.97) (4.80) 43,616.40 -
4965 6961.5 9157.65 7501.8611 3951.96501 4.8023117 0 0
- - - - - - 43,616.40 -
0 0 0 0 0 0 0 0
0 0 0 3000 0 0 0 0
- - - 3,000.00 - - 43,616.40 -
 3,000 3,000 3,000 3,000 0 0 0 0
- - - - - - - -
- - - 3,000.00 - - - -
3,000.00 3,000.00 3,000.00 - - - - -

3,512.0 4,103.1 4,660.2 5,457.8 (1,002.0) (1,024.5) (7,828.1) -

3,350.8 3,156.5 2,904.9 1,386.3 - - - -
1.0481103 1.299882 1.604228863 3.9370075
0 1 1 1 1 1 1 1

8,934 6,434 3,047 - - - - -

25% 25% 25% 25% 25% 25% 25% 25%

1.953125 2.4414063 3.051757813 3.8146973 4.76837158 5.9604645 7.4505806 9.3132257
- - - - - - 52,984.67 -
- - - - - - 8,351.00 -
- - - - - - 62,219.8 -
- - - - - - - -
15% 15% 15% 15% 15% 15% 15% 15%
- - - - - - - -

- - - - - - 43,616.4 -

3,512 4,103 4,660 1,386 - - - -

- - - 4,071.55 5,800.08 5,842.36 16,505.28 -

9,158 9,852 11,274 13,273 13,331 16,830 20,691 18,699

695 1,421 1,999 3,059 3,498 3,861 41,625 0

0 0 0 3,000 0 0 43,616 0
9,852 11,274 13,273 13,331 16,830 20,691 18,699 18,699

3,000 3,000 3,000 0 0 0 0 0

0 0 0 0 0 0 0 0
1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000
2,013 2,516 2,894 3,559 3,737 3,812 0 0
2,050 1,940 1,840 1,740 1,640 1,540 0 0
150 75 0 0 0 0 0 0
31,976 31,976 31,976 31,976 31,976 31,976 31,976 31,976
 40,189 40,507 40,710 38,275 38,353 38,328 32,976 32,976

8,994 5,547 1,292 - - - - -

19,965 21,962 24,158 22,502 18,952 15,005 0 0
36 47 58 69 80 91 14,277 14,277
1,342 1,678 1,929 2,373 2,492 2,541 0 0
9,852 11,274 13,273 13,331 16,830 20,691 18,699 18,699
40,189 40,507 40,710 38,275 38,353 38,328 32,976 32,976

0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1

3,918.77 4,898.46 5,633.23 6,928.87 7,275.32 7,420.82 7,569.24 -

1,017.16 1,289.33 1,494.14 1,850.44 1,945.71 1,985.73 16,201.32 -
55.41 167.76 125.82 221.86 59.32 24.92 (1,270.69) -
100.00 100.00 100.00 100.00 100.00 100.00 100.00 -
12.10 11.55 11.00 11.00 11.00 11.00 14,185.78 -
- - - - - - 52,984.67 -
2,758.30 3,352.93 3,924.27 4,767.58 5,181.28 5,321.18 59,709.05 -

3 4 5 6 7 8 9 10
3,512.03 4,103.14 4,660.20 5,457.85 5,800.08 5,842.36 - -
3,512.03 3,216.28 2,904.95 1,386.29 - - - -
- 886.86 1,755.25 - - - - -
- - - 4,071.55 5,800.08 5,842.36 - -

Senior
Exit Multiple 7.00 Debt/Capital 39.1% Mezz Debt 39%

J-Curve

Hold Per Equity IRR

20.2%
3 Err:523
4 -2.33%
5 12.32%
6 21.74%
7 21.81%
8 20.94%
9 20.16%
10 19.60%
 11 19.17%
12 18.84%

Senior IRR Project IRR

7.30% 8.43%
7.30% 7.96%
7.30% 7.47%
7.30% 6.97%
7.30% 6.45%
7.30% 5.93%
7.30% 5.38%
7.30% 4.82%
7.30% 4.25%
7.30% 3.64%
7.30% 2.88%
7.30% 2.05%
7.30% 1.18%
7.30% 0.26%
7.30% -0.72%
7.30% -1.76%
7.30% -2.88%
7.30% -4.09%
7.30% -5.41%
7.30% -6.88%
7.30% -8.53%
7.30% -52.06%
6.80% -48.29%
5.19%
3.43%
1.50%
-0.66%
-3.13%
-6.05%
-9.64%
 5% 5%
24 7
23% 65%

Senior IRR Project IRR

7% 8%
7% 8%
7% 7%
7% 7%
7% 6%
7% 6%
7% 5%
7% 5%
7% 4%
7% 4%
7% 3%
7% 2%
7% 1%
7% 0%
7% 0%
7% 0%
7% 0%
7% 0%
7% 0%
7% 0%
7% 0%
7% 0%
7% 0%
5% 0%
3% 0%
1% 0%
0% 0%
0% 0%
0% 0%
0% 0%
0% 0%
0% 0%
0% 0%
0% 0%
 11 12

7.30% 7.30%
10.00% 10.00%

27.50% 27.50%

60.00 60.00
40.00 40.00

100 100

2% 2%
1% 1%
3% 3%
2% 2%
 100.00 100.00

3,200.00 3,200.00
2.46 2.51
100% 100%

- -
3.46 4.08

7,875.0 8,032.5

0 0

- -
60 60
16% 16%
0.00 0.00

40.00 40.00
11.0% 11.0%
0.00 0.00

0.00 0.00

0.00 0.00
15,000 15,000

- -
- -
- -
- -
- -
- -
- -
- -

7.30% 7.30%
- -
 0 0
0 0
0 0

- -
- -
0 0
- -

0.00% 0.00%
- -

10.00% 10.00%
- -
- -

0 0
0 0

- -
- -
- -
- -
- -

6.50% 6.50%
- -

0 0
0 0
0 0
0 0
0 0

10.00% 10.00%
12.00% 12.00%

- -
- -
 - -
- -
- -
- -
- -

375 375

375 375

0.00% 0.00%
- -

375 375
- -

- -
- -
- -

- -

0 0
0 0
- -
- -
0 0
0 0
0 0
0 0
- -
0 0
- -

0 0
0 0
0 0
- -

0 0
0 0
0 0
- -
 - -

27.50% 27.50%
- -
- -
- -

14277.083 14277.083
0 0
14277.083 14277.083

0 0
0 0
0 0
0 0
0 0
- -
0 0
- -

0 0
0 0
- -
0 0
0 0
0 0
- -
0 0
- -
0 0
- -
0 0
0 0
0 0
- -
0 0
- -
0 0
0 0
- -
 0 0
- -
- -
- -

- -
- -

1 1

- -

25% 25%
11.641532 14.551915
- -
- -
- -
- -
15% 15%
- -

- -

- -

- -

18,699 18,699

0 0
0 0
18,699 18,699

0 0
0 0
1,000 1,000
0 0
0 0
0 0
31,976 31,976
32,976 32,976

- -
0 0
14,277 14,277
0 0
18,699 18,699
32,976 32,976

0 0
1 1

- -
- -
- -
- -
- -
- -
- -

11 12
- -
- -
- -
- -
Integrity

Sources and Uses 1

Pro Forma 1

Balance Sheet 1

Overall Integrity 1
Rachet Example

Equity IRR
From To Hurdle Inst Inv
0% 25% 100%
25% 100% 25% 85%

From To Incentive
-100% 0% 0%
0% 10% 5%
10% 50% 15%
50% 500% 20%

1 2 3 4 5

Budget Income 100 100 100 100 100

Actutal Income 80 100 110 120 150

Percentage -20% 0% 10% 20% 50%

0% 5% 15% 15% 20%

0% 5% 15% 15% 20%
3
Mgmt
0%
15%

50%
10%
0%
-100%

100

150

50%

20%
20%
Goodwill Example

Assets 1000 Equity 1000

Assets 1,000 2,200

Write-up 500
Goodwill 700

Consideration 2,000
Existing Equity -1000
Goodwill 1,000
Less: Asset-Write-up 500
Goodwill 500
Add: Fees 200
Sheet2
20%

48% -1000 0 0 500 4000

IRR Hurdle 20%

Pct of Excess 50%

0 1 2 3 4
25% -1000 0 0 500 2441.406
1 1.25 1.5625 1.953125 2.441406
Excess 1558.594

Mgr Pct 779.2969

Remiaing -1000 0 0 500 3220.703

41%
Index

Company A 9
Company B 9.5
Company C 8.5

Median 9

Liquity Discount 25%

Terminal EV/EBITDA 6.75

1 2 3
100 300 500
a b c

=INDEX(G15:I17,2,3)- 500

=INDEX(G15:G17,2)- 100

=INDEX(G 2 100