The document outlines the key steps in private equity transactions, including identifying target companies, conducting due diligence, negotiating terms, and securing funding. It discusses the objectives of private equity deals such as leveraging debt to maximize returns. Private equity transactions involve aligning stakeholders, taking a long-term view, and preparing for exit from the start. Management terms and distribution of sale proceeds are also covered.

1. The Ins and Outs of Private Equity Transactions Warwick Business School Alumni 14 th November 2011 Bharat Shah

12. PE Deal Funding Requirement £ Millions Enterprise Value (EBITDA £12M x Multiple of 6) 72.0 Transaction Cost 5.0 Total Funding Required 77.0

13. PE Deal Source of Funding £ Millions Senior Debt 45.0 Mezzanine Finance 0.0 Private Equity – Loan stock 29.0 Private Equity – Equity (90%) 2.7 Total Private Equity 31.7 Management Team Equity (10%) 0.3 Total Source of Funding 77.0

14. Net Sale Proceeds on Exit £ Millions Enterprise Value (EBITDA £16M x Earnings Multiple of 7) 112.0 Transaction Cost (6.0) Net Sale Proceeds 106.0

15. Distribution of Net Sale Proceeds on Exit Original £ Millions Distribution £ Millions Senior Debt 45.0 45.0 Private Equity – Loan stock 29.0 29.0 Private Equity – Equity (90%) 2.7 28.8 Total Private Equity 31.7 57.8 Management Equity (10%) 0.3 3.2 Total Source of Funding 77.0 106.0

17. Discussion plus Q&As