2.1·6 min read
Funding the Deal
Total sources must equal total uses. Fix the debt, and the sponsor's equity check is whatever is left.
By the end you can
- ✓Build a sources & uses table
- ✓Solve for the sponsor's equity
Uses (where cash goes)
- ›Purchase enterprise value
- ›Transaction & financing fees
- ›Minimum cash to operate
Sources (where cash comes from)
- ›Debt tranches (term loan, bonds)
- › equity
- ›Sometimes rollover equity
Worked example · Solve for the equity check
Given
- •Purchase EV $1,000, fees $40, debt raised $700
Solution
- 1.Total uses
- 2. equity
Answer
The writes a $340 . Fees push the equity need above the headline price.
Check yourself
Total uses are $1,200 and the deal raises $800 of debt. The sponsor equity is:
Practice in the simulator
Lock it in by building it yourself in a live, graded spreadsheet.