modeling-transaction-financing-structures

# Modeling Transaction Financing Structures ## When To Use - Structuring the debt/equity mix for a proposed acquisition - Sizing debt capacity against a target's cash flow profile - Evaluating leverage scenarios (e.g., senior secured vs. mezzanine vs. seller note) - Stress-testing covenant headroom under downside operating cases - Comparing financing alternatives for a management presentation or lender pitch ## Inputs To Gather - **Target financials**: 3–5 years of historical revenue, EBITDA, capex, working capital, and existing debt schedules - **Transaction terms**: Enterprise value or equity value, assumed purchase price multiples, transaction fees and expenses - **Debt term sheets or indicative terms**: Pricing (spread, OID), tenor, amortization schedule, commitment fees, call protection - **Tranche structure**: Revolver size, term loan A/B splits, high-yield or mezzanine layers, any seller financing or earnouts - **Covenant package**: Maximum leverage ratio, minimum interest/fixed-charge coverage, restricted payments basket, excess cash flow sweep percentages - **Equity contribution**: Sponsor equity check, rollover equity from management or seller, any co-invest or preferred equity - **Operating projections**: Management case and at least one downside case for the projection period (typically 5–7 years) ## Workflow 1. **Build the sources & uses table** - Purchase price (equity value + net debt adjustment + transaction expenses) - Sources: each debt tranche a...