Module IV· Cash SweepAdvanced
Question
What is the 'BASE analysis' and how do you apply it to debt repayment in an LBO?
Answer
Mechanics
BASE = Beginning + Additions − Subtractions = Ending. The standard schema for any roll-forward (debt, cash, equity, working capital).
Deep diveShow more details
Example — TLB roll-forward
| Item | $m | Note |
|---|---|---|
| Beginning Balance | 200.0 | Year-Open |
| Additions (drawdowns, OID amortization) | +0.5 | OID amortization = nominal increase |
| Subtractions Mandatory | (5.0) | Schedule |
| Subtractions Voluntary / Sweep | (30.0) | CFADR-driven |
| Ending Balance | 165.5 | Year-End |
Consequence
A clean BASE structure:
- Makes modeling errors visible (when the balance sheet doesn't balance)
- Enables clear senior-coaching conversations ('Begin minus Subtractions plus Additions equals Ending')
- Audit-ready for lenders and the investment committee
Common pitfalls
- Forgetting OID amortization as an addition → Year-End debt comes out too low
- Taking voluntary before mandatory → wrong sweep calculation
- Not trapping a negative Year-End balance → the model crashes or shows nonsense
Pitch tip
In a modeling test you're often told 'Walk me through your debt schedule' — a clean senior-level answer: 'I use a BASE structure: Beginning, Additions, Subtractions Mandatory, Subtractions Sweep, Ending. That way the senior sees immediately whether the model holds together.'