Investment Banking, 3E

Valuation, LBOs, M&A, and IPOs

LBO Analysis - Completed

JOSHUA ROSENBAUM
JOSHUA PEARL
ValueCo Corporation
Leveraged Buyout Analysis Financing Structure: Structure 1
($ in millions, fiscal year ending December 31) Operating Scenario: Base

Transaction Summary
Sources of Funds Uses of Funds Purchase Price Return Analysis
% of Total Multiple of EBITDA % of Total Offer Price per Share - Exit Year 2024
Amount Sources 9/30/2019 Cumulative Pricing Amount Uses Fully Diluted Shares - Entry Multiple 8.0x
Revolving Credit Facility - -% -x -x L+425 bps Purchase ValueCo Equity $4,350.0 72.5% Equity Purchase Price $4,350.0 Exit Multiple 8.0x
Term Loan A - -% -x -x NA Repay Existing Debt 1,500.0 25.0% Plus: Existing Net Debt 1,250.0 IRR 21%
Term Loan B 2,800.0 46.7% 4.0x 4.0x L+425 bps Tender / Call Premiums 20.0 0.3% Enterprise Value $5,600.0 Cash Return 2.6x
Term Loan C - -% -x 4.0x NA Financing Fees 100.0 1.7%
2nd Lien - -% -x 4.0x NA Other Fees and Expenses 30.0 0.5% Transaction Multiples Options
Senior Notes 850.0 14.2% 1.2x 5.2x 8.000% Enterprise Value / Sales Financing Structure 1
Senior Subordinated Notes - -% -x 5.2x NA LTM 9/30/2019 $3,385.0 1.7x Operating Scenario 1
Equity Contribution 2,100.0 35.0% 3.0x 8.2x 2019E 3,450.0 1.6x Cash Flow Sweep 1
Rollover Equity - -% -x 8.2x Enterprise Value / EBITDA Cash Balance 1
Cash on Hand 250.0 4.2% 0.4x 8.6x LTM 9/30/2019 $700.0 8.0x Average Interest 1
Total Sources $6,000.0 100.0% 8.6x 8.6x Total Uses $6,000.0 100.0% 2019E 725.0 7.7x Financing Fees 1

Summary Financial Data

Historical Period Projection Period
LTM Pro forma Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
2016 2017 2018 9/30/2019 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Sales $2,600.0 $2,900.0 $3,200.0 $3,385.0 $3,450.0 $3,708.8 $3,931.3 $4,127.8 $4,293.0 $4,421.7 $4,554.4 $4,691.0 $4,831.8 $4,976.7 $5,126.0
% growth NA 11.5% 10.3% NA 7.8% 7.5% 6.0% 5.0% 4.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%
Gross Profit $988.0 $1,131.0 $1,280.0 $1,350.0 $1,380.0 $1,483.5 $1,572.5 $1,651.1 $1,717.2 $1,768.7 $1,821.8 $1,876.4 $1,932.7 $1,990.7 $2,050.4
% margin 38.0% 39.0% 40.0% 39.9% 40.0% 40.0% 40.0% 40.0% 40.0% 40.0% 40.0% 40.0% 40.0% 40.0% 40.0%
EBITDA $491.4 $580.0 $672.0 $700.0 $725.0 $779.4 $826.1 $867.4 $902.1 $929.2 $957.1 $985.8 $1,015.4 $1,045.8 $1,077.2
% margin 18.9% 20.0% 21.0% 20.7% 21.0% 21.0% 21.0% 21.0% 21.0% 21.0% 21.0% 21.0% 21.0% 21.0% 21.0%
Capital Expenditures 136.4 114.0 144.0 152.3 155.3 166.9 176.9 185.8 193.2 199.0 204.9 211.1 217.4 224.0 230.7
% sales 5.2% 3.9% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5%
Cash Interest Expense 188.4 228.3 210.3 188.8 167.2 143.0 116.6 88.1 71.4 69.4 69.4
Total Interest Expense 202.4 242.4 224.4 202.9 181.2 157.1 129.6 101.1 75.3 69.4 69.4
Free Cash Flow
EBITDA $779.4 $826.1 $867.4 $902.1 $929.2 $957.1 $985.8 $1,015.4 $1,045.8 $1,077.2
Less: Cash Interest Expense (228.3) (210.3) (188.8) (167.2) (143.0) (116.6) (88.1) (71.4) (69.4) (69.4)
Plus: Interest Income - - - - - - - 1.2 3.8 6.6
Less: Income Taxes (78.6) (91.5) (104.2) (115.8) (126.7) (138.6) (150.8) (162.8) (170.4) (176.7)
Less: Capital Expenditures (166.9) (176.9) (185.8) (193.2) (199.0) (204.9) (211.1) (217.4) (224.0) (230.7)
Less: Increase in Net Working Capital (47.6) (41.0) (36.2) (30.4) (23.7) (24.4) (25.1) (25.9) (26.7) (27.5)
Free Cash Flow $257.9 $306.5 $352.4 $395.6 $436.8 $472.5 $510.6 $539.0 $559.2 $579.5
Cumulative Free Cash Flow 257.9 564.4 916.8 1,312.4 1,749.2 2,221.7 2,732.3 3,271.3 3,830.5 4,410.0

Capitalization
Cash - - - - - - - - $471.3 $1,030.5 $1,610.0
Revolving Credit Facility - - - - - - - - - - -
Term Loan A - - - - - - - - - - -
Term Loan B 2,800.0 2,542.1 2,235.6 1,883.2 1,487.6 1,050.8 578.3 67.7 - - -
Term Loan C - - - - - - - - - - -
Existing Term Loan - - - - - - - - - - -
2nd Lien - - - - - - - - - - -
Other Debt - - - - - - - - - - -
Total Senior Secured Debt $2,800.0 $2,542.1 $2,235.6 $1,883.2 $1,487.6 $1,050.8 $578.3 $67.7 - - -
Senior Notes 850.0 850.0 850.0 850.0 850.0 850.0 850.0 850.0 850.0 850.0 850.0
Total Senior Debt $3,650.0 $3,392.1 $3,085.6 $2,733.2 $2,337.6 $1,900.8 $1,428.3 $917.7 $850.0 $850.0 $850.0
Senior Subordinated Notes - - - - - - - - - - -
Total Debt $3,650.0 $3,392.1 $3,085.6 $2,733.2 $2,337.6 $1,900.8 $1,428.3 $917.7 $850.0 $850.0 $850.0
Shareholders' Equity 2,050.0 2,285.9 2,560.3 2,872.9 3,220.4 3,600.6 4,016.3 4,468.7 4,957.2 5,468.4 5,998.6
Total Capitalization $5,700.0 $5,677.9 $5,645.9 $5,606.1 $5,558.1 $5,501.4 $5,444.6 $5,386.4 $5,807.2 $6,318.4 $6,848.6
% of Bank Debt Repaid - 9.2% 20.2% 32.7% 46.9% 62.5% 79.3% 97.6% 100.0% 100.0% 100.0%

Credit Statistics
% Debt / Total Capitalization 64.0% 59.7% 54.7% 48.8% 42.1% 34.6% 26.2% 17.0% 14.6% 13.5% 12.4%
EBITDA / Cash Interest Expense 3.8x 3.4x 3.9x 4.6x 5.4x 6.5x 8.2x 11.2x 14.2x 15.1x 15.5x
(EBITDA - Capex) / Cash Interest Expense 3.0x 2.7x 3.1x 3.6x 4.2x 5.1x 6.4x 8.8x 11.2x 11.8x 12.2x
EBITDA / Total Interest Expense 3.6x 3.2x 3.7x 4.3x 5.0x 5.9x 7.4x 9.8x 13.5x 15.1x 15.5x
(EBITDA - Capex) / Total Interest Expense 2.8x 2.5x 2.9x 3.4x 3.9x 4.6x 5.8x 7.7x 10.6x 11.8x 12.2x
Senior Secured Debt / EBITDA 3.9x 3.3x 2.7x 2.2x 1.6x 1.1x 0.6x 0.1x -x -x -x
Senior Debt / EBITDA 5.0x 4.4x 3.7x 3.2x 2.6x 2.0x 1.5x 0.9x 0.8x 0.8x 0.8x
Total Debt / EBITDA 5.0x 4.4x 3.7x 3.2x 2.6x 2.0x 1.5x 0.9x 0.8x 0.8x 0.8x
Net Debt / EBITDA 5.0x 4.4x 3.7x 3.2x 2.6x 2.0x 1.5x 0.9x 0.4x (0.2x) (0.7x)
($ in millions, fiscal year ending December 31)
Income Statement
Historical Period Projection Period
LTM Pro forma Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
2016 2017 2018 9/30/2019 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Sales $2,600.0 $2,900.0 $3,200.0 $3,385.0 $3,450.0 $3,708.8 $3,931.3 $4,127.8 $4,293.0 $4,421.7 $4,554.4 $4,691.0 $4,831.8 $4,976.7 $5,126.0
% growth NA 11.5% 10.3% NA 7.8% 7.5% 6.0% 5.0% 4.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%

Cost of Goods Sold 1,612.0 1,769.0 1,920.0 2,035.0 2,070.0 2,225.3 2,358.8 2,476.7 2,575.8 2,653.0 2,732.6 2,814.6 2,899.1 2,986.0 3,075.6
Gross Profit $988.0 $1,131.0 $1,280.0 $1,350.0 $1,380.0 $1,483.5 $1,572.5 $1,651.1 $1,717.2 $1,768.7 $1,821.8 $1,876.4 $1,932.7 $1,990.7 $2,050.4
% margin 38.0% 39.0% 40.0% 39.9% 40.0% 40.0% 40.0% 40.0% 40.0% 40.0% 40.0% 40.0% 40.0% 40.0% 40.0%

Selling, General & Administrative 496.6 551.0 608.0 650.0 655.0 704.1 746.4 783.7 815.0 839.5 864.7 890.6 917.3 944.9 973.2
% sales 19.1% 19.0% 19.0% 19.2% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0%

Other Expense / (Income) - - - - - - - - - - - - - - -

EBITDA $491.4 $580.0 $672.0 $700.0 $725.0 $779.4 $826.1 $867.4 $902.1 $929.2 $957.1 $985.8 $1,015.4 $1,045.8 $1,077.2
% margin 18.9% 20.0% 21.0% 20.7% 21.0% 21.0% 21.0% 21.0% 21.0% 21.0% 21.0% 21.0% 21.0% 21.0% 21.0%

Depreciation 116.0 121.5 145.0 150.0 155.3 166.9 176.9 185.8 193.2 199.0 204.9 211.1 217.4 224.0 230.7
Amortization 39.0 43.5 48.0 50.0 51.8 55.6 59.0 61.9 64.4 66.3 68.3 70.4 72.5 74.7 76.9
EBIT $336.4 $415.0 $479.0 $500.0 $518.0 $556.9 $590.3 $619.8 $644.6 $663.9 $683.8 $704.3 $725.5 $747.2 $769.6
% margin 12.9% 14.3% 15.0% 14.8% 15.0% 15.0% 15.0% 15.0% 15.0% 15.0% 15.0% 15.0% 15.0% 15.0% 15.0%

Interest Expense
Revolving Credit Facility - - - - - - - - - - -
Term Loan A - - - - - - - - - - -
Term Loan B 119.0 158.9 140.9 119.4 97.8 73.6 47.2 18.7 2.0 - -
Term Loan C - - - - - - - - - - -
Existing Term Loan - - - - - - - - - - -
2nd Lien - - - - - - - - - - -
Senior Notes 68.0 68.0 68.0 68.0 68.0 68.0 68.0 68.0 68.0 68.0 68.0
Senior Subordinated Notes - - - - - - - - - - -
Commitment Fee on Unused Revolver 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3
Administrative Agent Fee 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2
Cash Interest Expense $188.4 $228.3 $210.3 $188.8 $167.2 $143.0 $116.6 $88.1 $71.4 $69.4 $69.4
Amortization of Deferred Financing Fees 14.0 14.0 14.0 14.0 14.0 14.0 12.9 12.9 3.9 - -
Total Interest Expense $202.4 $242.4 $224.4 $202.9 $181.2 $157.1 $129.6 $101.1 $75.3 $69.4 $69.4
Interest Income - - - - - - - (1.2) (3.8) (6.6)
Net Interest Expense $242.4 $224.4 $202.9 $181.2 $157.1 $129.6 $101.1 $74.1 $65.6 $62.8

Earnings Before Taxes 314.5 365.9 416.9 463.4 506.8 554.3 603.3 651.4 681.6 706.8
Income Tax Expense 78.6 91.5 104.2 115.8 126.7 138.6 150.8 162.8 170.4 176.7
Net Income $235.9 $274.4 $312.7 $347.5 $380.1 $415.7 $452.5 $488.5 $511.2 $530.1
% margin 6.4% 7.0% 7.6% 8.1% 8.6% 9.1% 9.6% 10.1% 10.3% 10.3%

Income Statement Assumptions

Sales (% YoY growth) NA 11.5% 10.3% NA 7.8% 7.5% 6.0% 5.0% 4.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%
Cost of Goods Sold (% margin) 62.0% 61.0% 60.0% 60.1% 60.0% 60.0% 60.0% 60.0% 60.0% 60.0% 60.0% 60.0% 60.0% 60.0% 60.0%
SG&A (% sales) 19.1% 19.0% 19.0% 19.2% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0%
Other Expense / (Income) (% of sales) -% -% -% -% -% -% -% -% -% -% -% -% -% -% -%
Depreciation (% of sales) 4.5% 4.2% 4.5% 4.4% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5%
Amortization (% of sales) 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5%
Interest Income 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5%
Tax Rate 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0%
($ in millions, fiscal year ending December 31)
Balance Sheet
Projection Period
Opening Adjustments Pro Forma Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
2019 + - 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Cash and Cash Equivalents $250.0 (250.0) - - - - - - - - $471.3 $1,030.5 $1,610.0
Accounts Receivable 450.0 450.0 483.8 512.8 538.4 560.0 576.7 594.1 611.9 630.2 649.1 668.6
Inventories 600.0 600.0 645.0 683.7 717.9 746.6 769.0 792.1 815.8 840.3 865.5 891.5
Prepaids and Other Current Assets 175.0 175.0 188.1 199.4 209.4 217.8 224.3 231.0 238.0 245.1 252.4 260.0
Total Current Assets $1,475.0 $1,225.0 $1,316.9 $1,395.9 $1,465.7 $1,524.3 $1,570.0 $1,617.1 $1,665.7 $2,186.9 $2,797.6 $3,430.1

Property, Plant and Equipment, net 2,500.0 2,500.0 2,500.0 2,500.0 2,500.0 2,500.0 2,500.0 2,500.0 2,500.0 2,500.0 2,500.0 2,500.0
Goodwill 1,000.0 1,850.0 (1,000.0) 1,850.0 1,850.0 1,850.0 1,850.0 1,850.0 1,850.0 1,850.0 1,850.0 1,850.0 1,850.0 1,850.0
Intangible Assets 875.0 875.0 819.4 760.4 698.5 634.1 567.8 499.4 429.1 356.6 282.0 205.1
Other Assets 150.0 150.0 150.0 150.0 150.0 150.0 150.0 150.0 150.0 150.0 150.0 150.0
Deferred Financing Fees - 100.0 100.0 86.0 71.9 57.9 43.8 29.8 16.8 3.9 - - -
Total Assets $6,000.0 $6,700.0 $6,722.2 $6,728.2 $6,722.0 $6,702.2 $6,667.6 $6,633.4 $6,598.7 $7,043.5 $7,579.5 $8,135.2

Accounts Payable 215.0 215.0 231.1 245.0 257.2 267.5 275.6 283.8 292.3 301.1 310.1 319.4
Accrued Liabilities 275.0 275.0 295.6 313.4 329.0 342.2 352.5 363.0 373.9 385.1 396.7 408.6
Other Current Liabilities 100.0 100.0 107.5 114.0 119.6 124.4 128.2 132.0 136.0 140.1 144.3 148.6
Total Current Liabilities $590.0 $590.0 $634.3 $672.3 $705.9 $734.2 $756.2 $778.9 $802.2 $826.3 $851.1 $876.6

Revolving Credit Facility - - - - - - - - - - - -

Term Loan A - - - - - - - - - - - -
Term Loan B - 2,800.0 2,800.0 2,542.1 2,235.6 1,883.2 1,487.6 1,050.8 578.3 67.7 - - -
Term Loan C - - - - - - - - - - - -
Existing Term Loan 1,000.0 (1,000.0) - - - - - - - - - - -
2nd Lien - - - - - - - - - - - -
Senior Notes - 850.0 850.0 850.0 850.0 850.0 850.0 850.0 850.0 850.0 850.0 850.0 850.0
Existing Senior Notes 500.0 (500.0) - - - - - - - - - - -
Senior Subordinated Notes - - - - - - - - - - - -
Other Debt - - - - - - - - - - - -
Deferred Income Taxes 300.0 300.0 300.0 300.0 300.0 300.0 300.0 300.0 300.0 300.0 300.0 300.0
Other Long-Term Liabilities 110.0 110.0 110.0 110.0 110.0 110.0 110.0 110.0 110.0 110.0 110.0 110.0
Total Liabilities $2,500.0 $4,650.0 $4,436.3 $4,167.9 $3,849.1 $3,481.8 $3,067.0 $2,617.2 $2,129.9 $2,086.3 $2,111.1 $2,136.6

Noncontrolling Interest - - - - - - - - - - - -
Shareholders' Equity 3,500.0 2,050.0 (3,500.0) 2,050.0 2,285.9 2,560.3 2,872.9 3,220.4 3,600.6 4,016.3 4,468.7 4,957.2 5,468.4 5,998.6
Total Shareholders' Equity $3,500.0 $2,050.0 $2,285.9 $2,560.3 $2,872.9 $3,220.4 $3,600.6 $4,016.3 $4,468.7 $4,957.2 $5,468.4 $5,998.6

Total Liabilities and Equity $6,000.0 $6,700.0 $6,722.2 $6,728.2 $6,722.0 $6,702.2 $6,667.6 $6,633.4 $6,598.7 $7,043.5 $7,579.5 $8,135.2

Balance Check 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000

Net Working Capital 635.0 635.0 682.6 723.6 759.8 790.2 813.9 838.3 863.4 889.3 916.0 943.5
(Increase) / Decrease in Net Working Capital (47.6) (41.0) (36.2) (30.4) (23.7) (24.4) (25.1) (25.9) (26.7) (27.5)

Balance Sheet Assumptions

Current Assets
Days Sales Outstanding (DSO) 47.6 47.6 47.6 47.6 47.6 47.6 47.6 47.6 47.6 47.6 47.6 47.6
Days Inventory Held (DIH) 105.8 105.8 105.8 105.8 105.8 105.8 105.8 105.8 105.8 105.8 105.8 105.8
Prepaid and Other Current Assets (% of sales) 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1%

Current Liabilities
Days Payable Outstanding (DPO) 37.9 37.9 37.9 37.9 37.9 37.9 37.9 37.9 37.9 37.9 37.9 37.9
Accrued Liabilities (% of sales) 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0%
Other Current Liabilities (% of sales) 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9%
($ in millions, fiscal year ending December 31)
Cash Flow Statement
Projection Period
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Operating Activities
Net Income $235.9 $274.4 $312.7 $347.5 $380.1 $415.7 $452.5 $488.5 $511.2 $530.1
Plus: Depreciation 166.9 176.9 185.8 193.2 199.0 204.9 211.1 217.4 224.0 230.7
Plus: Amortization 55.6 59.0 61.9 64.4 66.3 68.3 70.4 72.5 74.7 76.9
Plus: Amortization of Financing Fees 14.0 14.0 14.0 14.0 14.0 12.9 12.9 3.9 - -

Changes in Working Capital Items

(Inc.) / Dec. in Accounts Receivable (33.8) (29.0) (25.6) (21.5) (16.8) (17.3) (17.8) (18.4) (18.9) (19.5)
(Inc.) / Dec. in Inventories (45.0) (38.7) (34.2) (28.7) (22.4) (23.1) (23.8) (24.5) (25.2) (26.0)
(Inc.) / Dec. in Prepaid and Other Current Assets (13.1) (11.3) (10.0) (8.4) (6.5) (6.7) (6.9) (7.1) (7.4) (7.6)

Inc. / (Dec.) in Accounts Payable 16.1 13.9 12.2 10.3 8.0 8.3 8.5 8.8 9.0 9.3
Inc. / (Dec.) in Accrued Liabilities 20.6 17.7 15.7 13.2 10.3 10.6 10.9 11.2 11.6 11.9
Inc. / (Dec.) in Other Current Liabilities 7.5 6.5 5.7 4.8 3.7 3.8 4.0 4.1 4.2 4.3
(Inc.) / Dec. in Net Working Capital (47.6) (41.0) (36.2) (30.4) (23.7) (24.4) (25.1) (25.9) (26.7) (27.5)
Cash Flow from Operating Activities $424.8 $483.4 $538.2 $588.8 $635.8 $677.5 $721.7 $756.4 $783.1 $810.2

Investing Activities
Capital Expenditures (166.9) (176.9) (185.8) (193.2) (199.0) (204.9) (211.1) (217.4) (224.0) (230.7)
Other Investing Activities - - - - - - - - - -
Cash Flow from Investing Activities ($166.9) ($176.9) ($185.8) ($193.2) ($199.0) ($204.9) ($211.1) ($217.4) ($224.0) ($230.7)

Financing Activities
Revolving Credit Facility - - - - - - - - - -
Term Loan A - - - - - - - - - -
Term Loan B (257.9) (306.5) (352.4) (395.6) (436.8) (472.5) (510.6) (67.7) - -
Term Loan C - - - - - - - - - -
Existing Term Loan - - - - - - - - - -
2nd Lien - - - - - - - - - -
Senior Notes - - - - - - - - - -
Senior Subordinated Notes - - - - - - - - - -
Other Debt - - - - - - - - - -
Dividends - - - - - - - - - -
Equity Issuance / (Repurchase) - - - - - - - - - -
Cash Flow from Financing Activities ($257.9) ($306.5) ($352.4) ($395.6) ($436.8) ($472.5) ($510.6) ($67.7) - -

Excess Cash for the Period - - - - - - - $471.3 $559.2 $579.5

Beginning Cash Balance - - - - - - - - 471.3 1,030.5
Ending Cash Balance - - - - - - - $471.3 $1,030.5 $1,610.0

Cash Flow Statement Assumptions

Capital Expenditures (% of sales) 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5%
($ in millions, fiscal year ending December 31)
Debt Schedule
Projection Period
Pro forma Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Forward LIBOR Curve 1.85% 1.70% 1.65% 1.55% 1.55% 1.55% 1.55% 1.55% 1.55% 1.55% 1.55%

Cash Flow from Operating Activities $424.8 $483.4 $538.2 $588.8 $635.8 $677.5 $721.7 $756.4 $783.1 $810.2
Cash Flow from Investing Activities (166.9) (176.9) (185.8) (193.2) (199.0) (204.9) (211.1) (217.4) (224.0) (230.7)
Cash Available for Debt Repayment $257.9 $306.5 $352.4 $395.6 $436.8 $472.5 $510.6 $539.0 $559.2 $579.5
Total Mandatory Repayments MinCash (28.0) (28.0) (28.0) (28.0) (28.0) (28.0) (28.0) (28.0) - -
Cash From Balance Sheet - - - - - - - - - 471.3 1,030.5
Cash Available for Optional Debt Repayment $229.9 $278.5 $324.4 $367.6 $408.8 $444.5 $482.6 $511.0 $1,030.5 $1,610.0

Revolving Credit Facility

Revolving Credit Facility Size $250.0
Spread 4.250%
LIBOR Floor -%
Term 5 years
Commitment Fee on Unused Portion 0.50%

Beginning Balance - - - - - - - - - -
Drawdown/(Repayment) - - - - - - - - - -
Ending Balance - - - - - - - - - -

Interest Rate 5.95% 5.90% 5.80% 5.80% 5.80% 5.80% 5.80% 5.80% 5.80% 5.80%
Interest Expense - - - - - - - - - -
Commitment Fee 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3
Administrative Agent Fee 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2

Term Loan B Facility

Size $2,800.0
Spread 4.250%
LIBOR Floor -%
Term 7 years
Repayment Schedule 1.0% Per Annum, Bullet at Maturity

Beginning Balance $2,800.0 $2,542.1 $2,235.6 $1,883.2 $1,487.6 $1,050.8 $578.3 $67.7 - -
Mandatory Repayments (28.0) (28.0) (28.0) (28.0) (28.0) (28.0) (28.0) (28.0) - -
Optional Repayments (229.9) (278.5) (324.4) (367.6) (408.8) (444.5) (482.6) (39.7) - -
Ending Balance $2,542.1 $2,235.6 $1,883.2 $1,487.6 $1,050.8 $578.3 $67.7 - - -

Interest Rate 5.95% 5.90% 5.80% 5.80% 5.80% 5.80% 5.80% 5.80% 5.80% 5.80%
Interest Expense 158.9 140.9 119.4 97.8 73.6 47.2 18.7 2.0 - -

Senior Notes
Size $850.0
Coupon 8.000%
Term 8 years

Beginning Balance $850.0 $850.0 $850.0 $850.0 $850.0 $850.0 $850.0 $850.0 $850.0 $850.0
Repayment - - - - - - - - - -
Ending Balance $850.0 $850.0 $850.0 $850.0 $850.0 $850.0 $850.0 $850.0 $850.0 $850.0

Interest Expense 68.0 68.0 68.0 68.0 68.0 68.0 68.0 68.0 68.0 68.0
($ in millions, fiscal year ending December 31)
Returns Analysis
Projection Period
Pro forma Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Entry EBITDA Multiple 8.0x
Initial Equity Investment $2,100.0
EBITDA $779.4 $826.1 $867.4 $902.1 $929.2 $957.1 $985.8 $1,015.4 $1,045.8 $1,077.2
Exit EBITDA Multiple 8.0x
Enterprise Value at Exit $6,235.0 $6,609.1 $6,939.6 $7,217.1 $7,433.7 $7,656.7 $7,886.4 $8,123.0 $8,366.6 $8,617.6

Less: Net Debt

Revolving Credit Facility - - - - - - - - - -
Term Loan A - - - - - - - - - -
Term Loan B 2,542.1 2,235.6 1,883.2 1,487.6 1,050.8 578.3 67.7 - - -
Term Loan C - - - - - - - - - -
Existing Term Loan - - - - - - - - - -
2nd Lien - - - - - - - - - -
Senior Notes 850.0 850.0 850.0 850.0 850.0 850.0 850.0 850.0 850.0 850.0
Senior Subordinated Notes - - - - - - - - - -
Other Debt - - - - - - - - - -
Total Debt $3,392.1 $3,085.6 $2,733.2 $2,337.6 $1,900.8 $1,428.3 $917.7 $850.0 $850.0 $850.0
Less: Cash and Cash Equivalents - - - - - - - 471.3 1,030.5 1,610.0
Net Debt $3,392.1 $3,085.6 $2,733.2 $2,337.6 $1,900.8 $1,428.3 $917.7 $378.7 ($180.5) ($760.0)

Equity Value at Exit $2,842.9 $3,523.5 $4,206.4 $4,879.5 $5,532.8 $6,228.4 $6,968.7 $7,744.3 $8,547.1 $9,377.7

Cash Return 1.4x 1.7x 2.0x 2.3x 2.6x 3.0x 3.3x 3.7x 4.1x 4.5x

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Initial Equity Investment ($2,100.0) ($2,100.0) ($2,100.0) ($2,100.0) ($2,100.0) ($2,100.0) ($2,100.0) ($2,100.0) ($2,100.0) ($2,100.0)
Equity Proceeds $2,842.9 - - - - - - - - -
$3,523.5 - - - - - - - -
$4,206.4 - - - - - - -
$4,879.5 - - - - - -
$5,532.8 - - - - -
$6,228.4 - - - -
$6,968.7 - - -
$7,744.3 - -
$8,547.1 -
$9,377.7
IRR 35.4% 29.5% 26.1% 23.5% 21.4% 19.9% 18.7% 17.7% 16.9% 16.1%

IRR - Assuming Exit in 2024E IRR - Assuming 8.0x Entry Multiple

Exit Multiple Exit Year
21.4% 7.0x 7.5x 8.0x 8.5x 9.0x 2022 2023 2024 2025 2026
7.0x 7.0x 17.0% 16.6% 16.1%
Entry 7.5x Exit 7.5x 19.3% 18.3% 17.5%
Multiple 8.0x Multiple 8.0x 21.4% 19.9% 18.7%
8.5x 8.5x 23.4% 21.4% 19.9%
9.0x 9.0x 25.2% 22.8% 21.0%
Assumptions Page 1 - Income Statement and Cash Flow Statement
Projection Period
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029

Income Statement Assumptions

Sales (% growth) 7.5% 6.0% 5.0% 4.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%
Base 1 7.5% 6.0% 5.0% 4.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%
Sponsor 2 10.0% 8.0% 6.0% 4.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%
Management 3 12.0% 10.0% 8.0% 6.0% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0%
Downside 1 4 5.0% 4.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%
Downside 2 5 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%

Cost of Goods Sold (% sales) 60.0% 60.0% 60.0% 60.0% 60.0% 60.0% 60.0% 60.0% 60.0% 60.0%
Base 1 60.0% 60.0% 60.0% 60.0% 60.0% 60.0% 60.0% 60.0% 60.0% 60.0%
Sponsor 2 60.0% 60.0% 60.0% 60.0% 60.0% 60.0% 60.0% 60.0% 60.0% 60.0%
Management 3 59.0% 59.0% 59.0% 59.0% 59.0% 59.0% 59.0% 59.0% 59.0% 59.0%
Downside 1 4 61.0% 61.0% 61.0% 61.0% 61.0% 61.0% 61.0% 61.0% 61.0% 61.0%
Downside 2 5 62.0% 62.0% 62.0% 62.0% 62.0% 62.0% 62.0% 62.0% 62.0% 62.0%

SG&A (% sales) 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0%
Base 1 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0% 19.0%
Sponsor 2 18.0% 18.0% 18.0% 18.0% 18.0% 18.0% 18.0% 18.0% 18.0% 18.0%
Management 3 18.0% 18.0% 18.0% 18.0% 18.0% 18.0% 18.0% 18.0% 18.0% 18.0%
Downside 1 4 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% 20.0%
Downside 2 5 21.0% 21.0% 21.0% 21.0% 21.0% 21.0% 21.0% 21.0% 21.0% 21.0%

Depreciation (% sales) 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5%
Base 1 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5%
Sponsor 2 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5%
Management 3 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5%
Downside 1 4 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5%
Downside 2 5 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5%

Amortization (% sales) 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5%
Base 1 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5%
Sponsor 2 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5%
Management 3 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5%
Downside 1 4 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5%
Downside 2 5 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5%

Cash Flow Statement Assumptions

Capital Expenditures (% sales) 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5%
Base 1 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5%
Sponsor 2 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5%
Management 3 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5%
Downside 1 4 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0%
Downside 2 5 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0%
Assumptions Page 2 - Balance Sheet
Projection Period
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029

Current Assets
Days Sales Outstanding (DSO) 47.6 47.6 47.6 47.6 47.6 47.6 47.6 47.6 47.6 47.6
Base 1 47.6 47.6 47.6 47.6 47.6 47.6 47.6 47.6 47.6 47.6
Sponsor 2 47.6 47.6 47.6 47.6 47.6 47.6 47.6 47.6 47.6 47.6
Management 3 47.6 47.6 47.6 47.6 47.6 47.6 47.6 47.6 47.6 47.6
Downside 1 4 50.0 50.0 50.0 50.0 50.0 50.0 50.0 50.0 50.0 50.0
Downside 2 5 55.0 55.0 55.0 55.0 55.0 55.0 55.0 55.0 55.0 55.0

Days Inventory Held (DIH) 105.8 105.8 105.8 105.8 105.8 105.8 105.8 105.8 105.8 105.8
Base 1 105.8 105.8 105.8 105.8 105.8 105.8 105.8 105.8 105.8 105.8
Sponsor 2 105.8 105.8 105.8 105.8 105.8 105.8 105.8 105.8 105.8 105.8
Management 3 105.8 105.8 105.8 105.8 105.8 105.8 105.8 105.8 105.8 105.8
Downside 1 4 110.0 110.0 110.0 110.0 110.0 110.0 110.0 110.0 110.0 110.0
Downside 2 5 115.0 115.0 115.0 115.0 115.0 115.0 115.0 115.0 115.0 115.0

Prepaids and Other Current Assets (% sales) 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1%
Base 1 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1%
Sponsor 2 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1%
Management 3 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1%
Downside 1 4 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1%
Downside 2 5 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1%

Current Liabilities
Days Payable Outstanding (DPO) 37.9 37.9 37.9 37.9 37.9 37.9 37.9 37.9 37.9 37.9
Base 1 37.9 37.9 37.9 37.9 37.9 37.9 37.9 37.9 37.9 37.9
Sponsor 2 37.9 37.9 37.9 37.9 37.9 37.9 37.9 37.9 37.9 37.9
Management 3 37.9 37.9 37.9 37.9 37.9 37.9 37.9 37.9 37.9 37.9
Downside 1 4 35.0 35.0 35.0 35.0 35.0 35.0 35.0 35.0 35.0 35.0
Downside 2 5 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0

Accrued Liabilities (% sales) 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0%
Base 1 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0%
Sponsor 2 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0%
Management 3 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0%
Downside 1 4 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0%
Downside 2 5 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0%

Other Current Liabilities (% sales) 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9%
Base 1 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9%
Sponsor 2 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9%
Management 3 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9%
Downside 1 4 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9%
Downside 2 5 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9% 2.9%
($ in millions, fiscal year ending December 31)
Assumptions Page 3 - Financing Structures and Fees

Financing Structures Purchase Price

Structure Public / Private Target 2
1 2 3 4 5
Sources of Funds Structure 1 Structure 2 Structure 3 Structure 4 Status Quo Entry EBITDA Multiple 8.0x
Revolving Credit Facility Size $250.0 $250.0 $250.0 $250.0 - LTM 9/30/2019 EBITDA 700.0
Revolving Credit Facility Draw - - - - - Enterprise Value $5,600.0
Term Loan A - - - - -
Term Loan B 2,800.0 2,650.0 2,100.0 1,750.0 - Less: Total Debt (1,500.0)
Term Loan C - - - - - Less: Preferred Stock -
2nd Lien - - 700.0 - - Less: Noncontrolling Interest -
Senior Notes 850.0 1,000.0 700.0 1,000.0 - Plus: Cash and Cash Equivalents 250.0
Senior Subordinated Notes - - - 1,000.0 - Equity Purchase Price $4,350.0
Equity Contribution 2,100.0 2,100.0 2,250.0 2,250.0 -
Rollover Equity - - - - - Calculation of Fully Diluted Shares Outstanding
Cash on Hand 250.0 250.0 250.0 - - Offer Price per Share -
- - - - -
Total Sources of Funds $6,000.0 $6,000.0 $6,000.0 $6,000.0 - Basic Shares Outstanding -
Plus: Shares from In-the-Money Options -
Uses of Funds Less: Shares Repurchased -
Equity Purchase Price $4,350.0 $4,350.0 $4,350.0 $4,350.0 - Net New Shares from Options -
Repay Existing Bank Debt 1,500.0 1,500.0 1,500.0 1,500.0 - Plus: Shares from Convertible Securities -
Tender / Call Premiums 20.0 20.0 20.0 20.0 - Fully Diluted Shares Outstanding -
Financing Fees 100.0 100.0 100.0 100.0 -
Other Fees and Expenses 30.0 30.0 30.0 30.0 - Options/Warrants
- - - - - - Number of Exercise In-the-Money
- - - - - - Tranche Shares Price Shares Proceeds
Total Uses of Funds $6,000.0 $6,000.0 $6,000.0 $6,000.0 - Tranche 1 - - - -
Tranche 2 - - - -
Financing Fees Tranche 3 - - - -
Fees Tranche 4 - - - -
Structure 1 Size (%) ($) Tranche 5 - - - -
Revolving Credit Facility Size $250.0 2.250% $5.6 Total - - -
Term Loan A - - -
Term Loan B 2,800.0 2.250% 63.0 Convertible Securities
Term Loan C - - - Conversion Conversion New
2nd Lien - - - Amount Price Ratio Shares
Senior Notes 850.0 2.250% 19.1 Issue 1 - - - -
Senior Subordinated Notes - - - Issue 2 - - - -
Senior Bridge Facility 850.0 1.250% 10.6 Issue 3 - - - -
Senior Subordinated Bridge Facility - - - Issue 4 - - - -
Other Financing Fees & Expenses 1.6 Issue 5 - - - -
Total Financing Fees $100.0 Total -

Amortization of Financing Fees

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Term 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Revolving Credit Facility Size 5 $1.1 $1.1 $1.1 $1.1 $1.1 - - - - -
Term Loan A - - - - - - - - - - -
Term Loan B 7 9.0 9.0 9.0 9.0 9.0 9.0 9.0 - - -
Term Loan C - - - - - - - - - - -
2nd Lien - - - - - - - - - - -
Senior Notes 8 2.4 2.4 2.4 2.4 2.4 2.4 2.4 2.4 - -
Senior Subordinated Notes - - - - - - - - - - -
Senior Bridge Facility 8 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3 - -
Senior Subordinated Bridge Facility - - - - - - - - - - -
Other Financing Fees & Expenses 8 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 - -
Annual Amortization $14.0 $14.0 $14.0 $14.0 $14.0 $12.9 $12.9 $3.9 - -
Copyright © 2020 by Joshua Rosenbaum and Joshua Pearl. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Second Edition published by John Wiley & Sons, Inc. in 2013.
First Edition published by John Wiley & Sons, Inc. in 2009.
Published simultaneously in Canada.

No part of this publication may be reproduced, stored in a retrieval system, or transmitted

in any form or by any means, electronic, mechanical, photocopying, recording, scanning,
or otherwise, except as permitted under Section 107 or 108 of the 1976 United States
Copyright Act, without either the prior written permission of the Publisher, or authorization
through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc.,
222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax (978) 646-8600, or on the
Web at www.copyright.com. Requests to the Publisher for permission should be addressed
to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ
07030, (201) 748-6011, fax (201) 748-6008, or online at www.wiley.com/go/permissions.

Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their
best efforts in preparing this book, they make no representations or warranties with respect
to the accuracy or completeness of the contents of this book and specifically disclaim any
implied warranties of merchantability or fitness for a particular purpose. No warranty may
be created or extended by sales representatives or written sales materials. The advice and
strategies contained herein may not be suitable for your situation. You should consult with a
professional where appropriate. Neither the publisher nor author shall be liable for any loss
of profit or any other commercial damages, including but not limited to special, incidental,
consequential, or other damages.

For general information on our other products and services or for technical support, please
contact our Customer Care Department within the United States at (800) 762-2974, outside
the United States at (317) 572-3993 or fax (317) 572-4002.

Wiley publishes in a variety of print and electronic formats and by print-on-demand. Some
material included with standard print versions of this book may not be included in e-books or
in print-on-demand. If this book refers to media such as a CD or DVD that is not included in
the version you purchased, you may download this material at booksupport.wiley.com.

For more information about Wiley products, visit www.wiley.com.

ISBN 978-1-119-70618-2 (cloth)

ISBN 978-1-119-70658-8 (ePDF)
ISBN 978-1-119-70655-7 (ePub)

Printed in the United States of America

10 9 8 7 6 5 4 3 2 1