You own a company and a private equity firm offers to give you the following for 80%
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Question:
- You own a company and a private equity firm offers to give you the following for 80% of your $7MM EBITDA business:
- $50MM cash
- $5MM earn out paid at the end of year 1 if EBITDA goes up 10% (if hurdle is not met then $0 is earned)
- $10MM seller note that will amortize 5 years from the date of closing with 0% interest
- You retain 20%
The PE firm plans to borrow 4x from the credit markets at 8% blended interest. What is ROUGHLY the total value of this transaction (including the value of their retained equity)?
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