Module IV· Sources & UsesIntermediate
Question
Worked example: You acquire Industrial Manufacturing Co for $320m EV at 8x EBITDA of $40m. Existing debt $50m, cash $15m. What does the Uses side look like?
Answer
Worked example
Industrial Manufacturing Co — a middle-market industrial-manufacturing target. EV $320m at 8x EBITDA. Existing debt $50m, cash $15m.
Deep diveShow more details
Mechanics
| Uses item | $m | Calculation |
|---|---|---|
| Equity purchase price | 285 | EV 320 − net debt (50−15) |
| Refinance existing debt | 50 | Change-of-control on existing loans |
| M&A + legal fees | 6 | ~2% of EV (middle-market range) |
| Financing fees | 8 | ~3% of debt volume, estimated |
| Minimum cash | 5 | Working-capital reserve |
| Total Uses | 354 |
Consequence
Total Uses $354m — this amount must be covered by Sources. With 5x debt ($200m) and $15m of existing cash, the equity check works out to ~$140m (40% equity share) — typical for middle-market LBOs.