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File Name: C:\Courses\Course Materials\3 Templates and Exercises M&A Models\LBO Shell.xls

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TOCTOCSummaryModelWaterfall ChartIntegrityRachet ExampleGoodwill ExampleSheet2Index

EBITDA ScenarioSensitivty Factor 100%

EBITDA 3,200.00

Sources and Uses Map Amount vs EBITDA Pct IRR Break Even

Senior Debt 15,000 4.69 39.1% 7.3% 22.5%Mezzenaine Debt 15,000 4.69 39.1% 10.0% 47.5%Investor Equity 8,351 2.61 21.8% 20.2% 70.0%Mangement Equity 0 - 0.0% 0.0% 0.0%Total 38,351 11.98 100.0%

Entry Multiple EV/EBITDA 12.00 Transaction Price 38,400

Exit Multiple EV/EBIDA 7.00

Project IRR 11.86%WACC 11.00%Economic Return 0.86%

Holding Period 9.00

Volatility 22%Model Verified 1

Summary

1 2 3 4 5 6 7 8 9 10 11 12 -

1,000.00

2,000.00

3,000.00

4,000.00

5,000.00

6,000.00

7,000.00

Cash Flow WaterfallJunior Debt Service

Senior Sweep

Senior Debt Service

Cash Flow

80%

75%

70%

65%

60%

55%

50%

45%

40%

35%

30%

25%

20%

15%

10% 5% 0%

0%

2%

4%

6%

8%

10%

12%

14%Entry Multiple 11.50 Exit Multiple 8.60 Senior Debt/Capital 45.2% Mezz Debt 36%

Equity IRR

Junior IRR

Senior IRR

Project IRR

EBITDA Sensitivty

Equity IRR

Apply Vol

100 100

1 2 3 4 5 6 7 8 9 10 11 12 13

(20,000.0)

(10,000.0)

-

10,000.0

20,000.0

30,000.0

40,000.0

50,000.0

Equity Cash Flows

1 2 3 4 5 6 7 8 9 10 11 12 -

1,000.00

2,000.00

3,000.00

4,000.00

5,000.00

6,000.00

7,000.00

Cash Flow WaterfallJunior Debt Service

Senior Sweep

Senior Debt Service

Cash Flow

80%

75%

70%

65%

60%

55%

50%

45%

40%

35%

30%

25%

20%

15%

10% 5% 0%

0%

2%

4%

6%

8%

10%

12%

14%Entry Multiple 11.50 Exit Multiple 8.60 Senior Debt/Capital 45.2% Mezz Debt 36%

Equity IRR

Junior IRR

Senior IRR

Project IRR

EBITDA Sensitivty

Equity IRR

1 2 3 4 5 6 7 8 9 10-5.00%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

J-Curve Entry Multiple 12.00 Exit Multiple 7.50

Senior Debt/Capital 49.5%

Holding Period

Equi

ty IR

R

1 2 3 4 5 6 7 8 9 10 11 12 13

(20,000.0)

(10,000.0)

-

10,000.0

20,000.0

30,000.0

40,000.0

50,000.0

Equity Cash Flows

1 2 3 4 5 6 7 8 9 10-5.00%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

J-Curve Entry Multiple 12.00 Exit Multiple 7.50

Senior Debt/Capital 49.5%

Holding Period

Equi

ty IR

R

Equity IRR 20.2%Model Verfied 1 Mezz IRR 10.0%

Entry Multiple 12.00 Exit Multiple 7.00

0 1 2

Transaction InputsOperating Inputs

Current EBITDA 3,200.00

EV/EBITDA Multiple 12 120

Enterprise Value 38,400.00

Holding Period 9.00

Exit Multiple 7.00 75

Apply Volatility 0

Volatility 22% 22

Finaning Inputs

Arrangement Fees 1.50%

Total Fees 576.00

Cash of Target Used 2,000.00

Management InventiveHurdle Rate 25%Pct of Excess 15%

Debt Inputs

Senior Debt Issued 15,000.0

Grace Period (Years) 1Repayment Period (Years) 6Interest Rate 7.30% 7.30% 7.30% 7.30%

Debt Service Revere Acct Months 0Debt Service Reserve Intrest Rate 6.50%Minimum Debt Service Reserve 0

Cash Sweep Covenant (DSCR) 1.2

Model

Volatility

Interest Rate Increase Trigger 1.1Increased Interest Rate 7.80%

Debt Fees 1.00%

Mezzanine Debt Issued 15,000.00Interest Capitalised 0Interest Rate 0.1 10.00% 10.00% 10.00%

Fees 0.015Equity Kicker

Cash Sweep Table DEBT/EBITDAFrom To Percent

5.00 100%5.00 3.00 75%3.00 2.50 50%2.50 0.00 0%

Stanby Equity

Commitment 1,000Term of Commitment (yrs) 1Trigger - DSCR 1

Interest Income Rate 0.03

Tax and Other Assumptions

Book Depreciation 0.1Tax Depreciation 0.12

Income Tax Rate 0.275 27.50% 27.50% 27.50%

Amortisation Rate 0.2

EBITDA Margin 0.32

DOS - Debtors 60.00 60.00 60.00 60.00 60.00DOS - Expense 40.00 40.00 40.00 40.00 40.00

Retirments 200 200

Operating Inputs

EBITDA Sensitivity Factor 100% 100

EBITDA GrowthBase Case 5% 7%Downside Case 2% 2%Upside Case 8% 9%Base Case 5% 7%

Captial Expenditure 500.00 100.00

Working Section

Base EBITDA 3,200.00 3,200.00 3,200.00Growth Index 1.00 1.05 1.12Sensitivity Factor 100% 100% 100%

Volatility Applied - - - Volatility Factor 1.00 1.37 0.78

EBITDA 3,200.0 3,360.0 3,595.2

Terminal Procceeds 0 0 0

Revenues - 10,500 11,235 DOS - Debtors 60 60 60 Percent of Revenues 16% 16% 16%Debtor Balance 1,000.00 1,726.03 1,846.85

DOS- Creditors 40.00 40.00 40.00Pct of Revenues 11.0% 11.0%Creditor Balance 1,000.00 1,150.68 1,231.23

Trade Working Capital 0.00 575.34 615.62

Change in Working Capital 575.34 40.27

Uses and Sources of FundsUses of Funds

Acquisition of Target 38,400.0 Arrangement Fees 576.0 Debt Fees 375.0 Debt Service Reserve Account - Standby Equity 1,000.0

Total Uses of Funds 40,351.0

Sources of FundsCash of Target 2,000.0 Senior Debt 15,000.0 Mezzanine Debt 15,000.0 Investor Equity 8,351.0 Management Team Rachet

Total Sources of Funds 40,351.0

Source and Use Check 1.0

Goodwill

Purchase Price of Equity 38,400 Less: Existing Equity on Books 6,500 Net Value 31,900 Less: Asset Write-ups 500 Less: Debt Write-downs - Add: Consulting and Legal Fees 576

Goodwill 31,976

Pro-Forma Balance SheetAssets Opening Write-up Issue Debt CashCash 5,000 (2,000.0)Debt Service Reserve Acct - Stand-by Equity Deposit 1,000.0 Trade Debtors 1,000Fixed Assets 1,500 500 Unamortised FeesGoodwill 31,976

Total 7,500

Senior Debt 15,000.0 Mezzanine Debt 15,000.0 Payables 1,000Equity 6,500

Total 7,500

Pro-Forma Check

Debt ScheduleTerm 6

Senior DebtTotal Debt Balance 15,000 15,000 15,000

Opening Balance - 15,000 13,934 Add: Debt Draws 15,000 - - Less: Scheduled Repayments - - 2,500 Less: Prepayments from Sweep 1,066 - Add: Defaults on Debt - - 221 Less: Repayments of Default - - Less: Repayment at Terminal Date - - - Closing Balance 15,000 13,934 11,655

Debt Fees 150

Interest Rate 7.30% 7.30% 7.30%Interest Expense - 1,095 1,017

Mezzanine DebtCapitalise Interest 0.00%

Total Debt Balance

Opening Balance 0 15000 16500Add: Debt Draws 15000 0 0Add: Capatilised Interest 0 0 0Less: Prepayments from SweepAdd: Defaults on Debt - 1,500.00 3,150.00 Less: Repayments of Default - 1,500.00 Less: Scheduled Repayments 0 0 0Closing Balance 15,000.00 16,500.00 18,150.00

Debt Fee Percent 1.50% 0.00% 0.00%Debt Fees 225.00 - -

Interest Rate 10.00% 10.00% 10.00%Interest Expense - 1,500.00 1,650.00 Interest Paid - 1,500.00 1,650.00

Debt Service Reserve AccountDebt Service Reserve Months 0

Total Senior Debt Service 0 1095 3517.1888Required Balance in Account 0 0 0

Opening Balance - - - Add: Inflows from Initial Cash - - - Less: Payment of Debt Service - - - Add: New Inflows - - - Closing Balance - - -

Interest Income Rate 6.50% 6.50% 6.50%Interest Income - - -

Plant Assets and Fee Amortisation

Plant AssetsOpening Balance 2,000 2,300Add: Cap Exp 500 100Less: Retirements 200 200Less: Book Value when Sell 0 0Closing Balance 2,000 2,300 2,200

Book Depreciation Rate 10.00% 10.00% 10.00%Tax Depreciation Rate 12.00% 12.00% 12.00%

Book Depreciation Charge - 200 230 Tax Depreciation Charge - 240 276

Accumulated DepreciationOpening Balance - - Add: Depreciation Charge 200 230 Less: Retirements 200 200 Less: Book Value when Sell - - Closing Balance - - 30

Debt Financing FeesOpening Balance 375 375 Add: FeesClosing Balance 375 375 375

Amortisation Rate 20.00% 20.00%Amortisation 75.00 75.00

Accumlated Amortisation - 75 150 Net Unamortised Fees 300 225

Sale Proceeds - - - Less: Net Book Value - - - Gain on Sale - - -

Net Book Value 2,000 2,300 2,170

Profit and Loss

EBITDA 0 3360 3595.2Add: Gain on Sale at Terminal Year 0 0 0Less: Depreciation - 200.00 230.00

EBIT - 3,160.00 3,365.20 Less: Interest Expense on Senior 0 1095 1017.1887Less: Interest Expense on Junior 0 1500 1650Add: Interest Income 0 0 0Less: Fee Amortisation 0 75 75

EBT - 490.00 623.01 Less: Book Taxes 0 134.75 171.32809

Earnings - 355.25 451.68

Tax Paid and Deferred Tax

Book EBT 0 490 623.01125Less: Tax Depreciation 0 40 46Less: Gain on Sale 0 0 0Adjusted EBT - 450.00 577.01

NOL BalanceOpening Balance 0 0 0Add: Tax Loss 0 0 0Less: Withdrawls 0 0 0Closing Balance - - -

Taxable Income - 450.00 577.01

Tax Rate 27.50% 27.50% 27.50%Taxes Paid - 123.75 158.68 Less: Book Taxes - 134.75 171.33 Change in Deferred Taxes - 11.00 12.65

Accumulated Deferred TaxOpening Balance 0 0 11Add: Deferred Tax Change 0 11 12.65Closing Balance 0 11 23.65

Cash FlowEBITDA 0 3360 3595.2Add: Interest Income 0 0 0Add: Sale Proceeds 0 0 0Less: WC Changes 575.34247 40.273973Less: Cash Taxes 0 123.75 158.67809

Operaing Cash Flow - 2,660.91 3,396.25 Less: Capital Expenditures 38400 500 100

Cash after Cap Exp (38,400.00) 2,160.91 3,296.25 Add: New Senior Debt 15000Add: New Mezz Debt 15000Add: Senior Debt From TransactionAdd: Equity Issued 8351Less: Debt Fees and Other Fees 951Less: Stanby Equity 1000Less: DSCRA Inflows 0 0 0Plus: DSCRA Outflows 0 0 0

Cash for Waterfall (2,000.00) 2,160.91 3,296.25 Less: Senior Interest 0 1095 1017.1887Less: Senior Repayment 0 0 2500Less: Repayment of Default 0 0 0

Cash before Senior Sweep (2,000.00) 1,065.91 (220.94)Less: Pre-payments from Sweep 0 1065.9075 0

Cash Flow after Senior Debt (2,000.00) - (220.94)Add: Defatult on Senior Debt 0 220.94082

Cash Flow to Junior Debt - - Less: Junior Cash Interest 0 1500 1650Less: Junior Repayment 0 0 0Less: Repayment of Default 0 0 1500

Cash after Junior Debt (1,500.00) (3,150.00)Add: Default on Junior 1500 3150

Net Cash Flow - - Increase in Cash Balance 0 0Reduction in Cash Balance 0 0Equity Distributions - -

Cash Balance

Opening Balance 3,000 3,000Add: Cash Flow not Distributed - - Less: Release after Senior Debt - - Closing Balance 3,000 3,000.00 3,000.00

DSCRCash Flow for Waterfall 2,160.9 3,296.2 Debt Service 1,095.0 3,517.2

DSCR 1.9734315 0.9371826Switch for Cash Sweep Trigger 1 0

Debt Balance for Sweep 15,000 11,434

Gross Equity IRR Before RachetHurdle Rate 25% 25% 25%FV Factor 1 1.25 1.5625Terminal Value - - Cash Flow for Manager Calc 0% (8,351.0) - - Cash Flow with Hurdle Rate 25% (8,351.0) - - Excess ot Managers - - Percent to Managers 15% 15%Mngr Proceeds - -

Remaining Cash to Equity Investors (8,351.0) - - Equity IRR 20%

Cash to Senior (15,000) 2,161 3,296 Senior IRR 7.3%

Cash to Junior (15,000.00) - - Junior IRR 10.0%

Equity Balance

Opening Balance 8,351 8,706Add: Equity AdvancesAdd: Net Income 355 452Less: Dividends 0 0Closing Balance 8,351 8,706 9,158

Balance SheetAssetsCash 3,000 3,000 3,000Debt Service Reserve Acct 0 0 0Stand-by Equity Deposit 1,000 1,000 1,000Trade Debtors 1,000 1,726 1,847Fixed Assets 2,000 2,300 2,170Unamortised Fees 375 300 225Goodwill 31,976 31,976 31,976

Total 39,351 40,302 40,218

Senior Debt 15,000 13,934 11,655 Mezzanine Debt 15,000 16,500 18,150Accumulated Deferred Tax 0 11 24Payables 1,000 1,151 1,231Equity 8,351 8,706 9,158

Total 39,351 40,302 40,218

0 0 01 1 1 1

Project IRR and Free Cash Flow 0

EBITDA - 3,360.00 3,595.20 Less; Taxes on EBIT - 869.00 925.43 Less: WC Changes - 575.34 40.27 Less: Capital Exenditures 38,400.00 500.00 100.00 Add: Deferred Tax - 11.00 12.65 Add: Terminal Proceeds - - - Total Cash Flow (38,400.00) 1,426.66 2,542.15

Overall IRR on Free Cash Flow 11.86%

1 2Cash Flow Cash Flow 2,160.91 3,296.25 Senior Debt Service Senior Debt 1,095.00 3,296.25 Senior Sweep Senior Swee 1,065.91 - Junior Debt Service Junior Debt S - -

Entry Multip 12.00 J-Curve

Equity IRR Junior IRR80% 12.45% 10.00%

77.5% 11.12% 10.00%75.0% 9.63% 10.00%72.5% 7.97% 10.00%70.0% 6.06% 10.00%67.5% 3.83% 10.00%65.0% 1.18% 10.00%62.5% -2.26% 10.00%60.0% -7.11% 10.00%57.5% 10.00%55.0% 9.57%52.5% 8.49%50.0% 7.31%47.5% 6.02%45.0% 4.58%42.5% 2.97%40.0% 1.13%37.5% -1.02%35.0% -3.63%32.5% -6.97%30.0% -11.69%27.5%25.0%22.5%20.0%17.5%15.0%12.5%10.0%

7.5%5.0%2.5%0.0%

-2.5%-5.0%-7.5%

-10.0%-12.5%

Hurdle 5% 5%Match 5 14Index 70% 47%

Equity IRR Junior IRR80% 12% 10%78% 11% 10%75% 10% 10%73% 8% 10%70% 6% 10%68% 4% 10%65% 1% 10%62% 0% 10%60% 0% 10%57% 0% 10%55% 0% 10%52% 0% 8%50% 0% 7%47% 0% 6%45% 0% 5%42% 0% 3%40% 0% 1%37% 0% 0%35% 0% 0%32% 0% 0%30% 0% 0%27% 0% 0%25% 0% 0%22% 0% 0%20% 0% 0%17% 0% 0%15% 0% 0%12% 0% 0%10% 0% 0%

7% 0% 0%5% 0% 0%2% 0% 0%0% 0% 0%

-3% 0% 0%

Holding Per 9.00

EBITDA Sens 100%3 4 5 6 7 8 9 10

7.30% 7.30% 7.30% 7.30% 7.30% 7.30% 7.30% 7.30%

10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%

27.50% 27.50% 27.50% 27.50% 27.50% 27.50% 27.50% 27.50%

60.00 60.00 60.00 60.00 60.00 60.00 60.00 60.0040.00 40.00 40.00 40.00 40.00 40.00 40.00 40.00

200 200 100 100 100 100 100 100

1

9% 25% 15% 23% 5% 2% 2% 2%4% 4% 1% 1% 1% 1% 1% 1%

10% 25% 10% 10% 5% 3% 3% 3%9% 25% 15% 23% 5% 2% 2% 2%

100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

3,200.00 3,200.00 3,200.00 3,200.00 3,200.00 3,200.00 3,200.00 3,200.001.22 1.53 1.76 2.17 2.27 2.32 2.37 2.41

100% 100% 100% 100% 100% 100% 100% 100%

- - - - - - - - 0.49 0.49 0.55 0.40 0.26 0.27 0.25 0.27

3,918.8 4,898.5 5,633.2 6,928.9 7,275.3 7,420.8 7,569.2 7,720.6

0 0 0 0 - 0 52984.666 0

12,246 15,308 17,604 21,653 22,735 23,190 23,654 - 60 60 60 60 60 60 60 60

16% 16% 16% 16% 16% 16% 16% 16%2,013.07 2,516.33 2,893.78 3,559.35 3,737.32 3,812.07 0.00 0.00

40.00 40.00 40.00 40.00 40.00 40.00 40.00 40.0011.0% 11.0% 11.0% 11.0% 11.0% 11.0% 11.0% 11.0%

1,342.04 1,677.55 1,929.19 2,372.90 2,491.55 2,541.38 0.00 0.00

671.02 838.78 964.59 1,186.45 1,245.77 1,270.69 0.00 0.00

55.41 167.76 125.82 221.86 59.32 24.92 -1,270.69 0.00

New Equity Target Eq Debt Fees Adj Total (2,000) 3,000 - 0 1,000 1,000 - 1,000 500 2,000

375.0 375 375 31,976 31,976 31,851 39,351

15,000 15,000 15,000 - 1,000

8,351.0 -6,500 1,851 8,351 31,851 39,351

1

15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000

11,655 8,994 5,547 1,292 - - - - - - - - - - - - 2,500 2,500 2,500 1,292 - - - - - 887 1,755 - - - - - 60 - - - - - - - 221 60 - - - - - - - - - - - - - - 8,994 5,547 1,292 - - - - -

7.30% 7.30% 7.30% 7.30% 7.30% 7.30% 7.30% 7.30% 851 657 405 94 - - - -

18150 19965 21961.5 24157.65 22501.8611 18951.965 15004.802 00 0 0 0 0 0 0 00 0 0 0 0 0 0 0

4,965.00 6,961.50 9,157.65 7,501.86 3,951.97 4.80 - - 3,150.00 4,965.00 6,961.50 9,157.65 7,501.86 3,951.97 4.80 -

0 0 0 0 0 0 15000 0 19,965.00 21,961.50 24,157.65 22,501.86 18,951.97 15,004.80 - -

0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% - - - - - - - -

10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 1,815.00 1,996.50 2,196.15 2,415.77 2,250.19 1,895.20 1,500.48 - 1,815.00 1,996.50 2,196.15 2,415.77 2,250.19 1,895.20 1,500.48 -

3350.8174 3156.5492 2904.947954 1386.2933 0 0 0 00 0 0 0 0 0 0 0

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

6.50% 6.50% 6.50% 6.50% 6.50% 6.50% 6.50% 6.50% - - - - - - - -

2,200 2,100 2,000 2,000 2,000 2,000 2,000 0100 100 100 100 100 100 100 0200 200 100 100 100 100 100 0

0 0 0 0 0 0 2,000 02,100 2,000 2,000 2,000 2,000 2,000 0 0

10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%12.00% 12.00% 12.00% 12.00% 12.00% 12.00% 12.00% 12.00%

220 210 200 200 200 200 200 - 264 252 240 240 240 240 240 -

30 50 60 160 260 360 460 - 220 210 200 200 200 200 200 - 200 200 100 100 100 100 100 - - - - - - - 560 - 50 60 160 260 360 460 - -

375 375 375 375 375 375 375 375

375 375 375 375 375 375 375 375

20.00% 20.00% 20.00% 0.00% 0.00% 0.00% 0.00% 0.00% 75.00 75.00 75.00 - - - - -

225 300 375 375 375 375 375 375 150 75 - - - - - -

- - - - - - 52,985 - - - - - - - 1,440 - - - - - - - 51,545 -

2,050 1,940 1,840 1,740 1,640 1,540 - -

3918.768 4898.46 5633.229 6928.8717 7275.31525 7420.8216 7569.238 00 0 0 0 0 0 51544.666 0

220.00 210.00 200.00 200.00 200.00 200.00 200.00 - 3,698.77 4,688.46 5,433.23 6,728.87 7,075.32 7,220.82 58,913.90 - 850.81743 656.5492 404.9479538 94.314456 0 0 0 0

1815 1996.5 2196.15 2415.765 2250.18611 1895.1965 1500.4802 00 0 0 0 0 0 0 0

75 75 75 0 0 0 0 0 957.95 1,960.41 2,757.13 4,218.79 4,825.13 5,325.63 57,413.42 - 263.43641 539.11297 758.2110377 1160.1679 1326.91051 1464.5469 15788.692 0

694.51 1,421.30 1,998.92 3,058.62 3,498.22 3,861.08 41,624.73 -

957.95057 1960.4108 2757.131046 4218.7922 4825.12914 5325.6251 57413.424 044 42 40 40 40 40 40 0

0 0 0 0 0 0 51544.666 0 913.95 1,918.41 2,717.13 4,178.79 4,785.13 5,285.63 5,828.76 -

0 0 0 0 0 0 0 00 0 0 0 0 0 0 00 0 0 0 0 0 0 0

- - - - - - - -

913.95 1,918.41 2,717.13 4,178.79 4,785.13 5,285.63 5,828.76 -

27.50% 27.50% 27.50% 27.50% 27.50% 27.50% 27.50% 27.50% 251.34 527.56 747.21 1,149.17 1,315.91 1,453.55 1,602.91 - 263.44 539.11 758.21 1,160.17 1,326.91 1,464.55 15,788.69 - 12.10 11.55 11.00 11.00 11.00 11.00 14,185.78 -

23.65 35.75 47.3 58.3 69.3 80.3 91.3 14277.08312.1 11.55 11 11 11 11 14185.783 0

35.75 47.3 58.3 69.3 80.3 91.3 14277.083 14277.083

3918.768 4898.46 5633.229 6928.8717 7275.31525 7420.8216 7569.238 00 0 0 0 0 0 0 00 0 0 0 0 0 52984.666 0

55.405479 167.75548 125.8166096 221.85662 59.3225314 24.915463 -1270.6886 0251.33641 527.56297 747.2110377 1149.1679 1315.91051 1453.5469 1602.9084 0

3,612.03 4,203.14 4,760.20 5,557.85 5,900.08 5,942.36 60,221.68 - 100 100 100 100 100 100 100 0

3,512.03 4,103.14 4,660.20 5,457.85 5,800.08 5,842.36 60,121.68 -

0 0 0 0 0 0 0 00 0 0 0 0 0 0 0

3,512.03 4,103.14 4,660.20 5,457.85 5,800.08 5,842.36 60,121.68 - 850.81743 656.5492 404.9479538 94.314456 0 0 0 0

2500 2500 2500 1291.9788 0 0 0 0220.94082 59.732132 0 0 0 0 0 0

(59.73) 886.86 1,755.25 4,071.55 5,800.08 5,842.36 60,121.68 - 0 886.86022 1755.253399 0 0 0 0 0

(59.73) - - 4,071.55 5,800.08 5,842.36 60,121.68 - 59.732132 0 0 0 0 0 0 0

- - - 4,071.55 5,800.08 5,842.36 60,121.68 - 1815 1996.5 2196.15 2415.765 2250.18611 1895.1965 1500.4802 0

0 0 0 0 0 0 15000 03150 4965 6961.5 9157.65 7501.86111 3951.965 4.8023117 0

(4,965.00) (6,961.50) (9,157.65) (7,501.86) (3,951.97) (4.80) 43,616.40 - 4965 6961.5 9157.65 7501.8611 3951.96501 4.8023117 0 0

- - - - - - 43,616.40 - 0 0 0 0 0 0 0 00 0 0 3000 0 0 0 0

- - - 3,000.00 - - 43,616.40 -

3,000 3,000 3,000 3,000 0 0 0 0 - - - - - - - - - - - 3,000.00 - - - - 3,000.00 3,000.00 3,000.00 - - - - -

3,512.0 4,103.1 4,660.2 5,457.8 (1,002.0) (1,024.5) (7,828.1) - 3,350.8 3,156.5 2,904.9 1,386.3 - - - - 1.0481103 1.299882 1.604228863 3.9370075

0 1 1 1 1 1 1 1

8,934 6,434 3,047 - - - - -

25% 25% 25% 25% 25% 25% 25% 25%1.953125 2.4414063 3.051757813 3.8146973 4.76837158 5.9604645 7.4505806 9.3132257

- - - - - - 52,984.67 - - - - - - - 8,351.00 - - - - - - - 62,219.8 - - - - - - - - -

15% 15% 15% 15% 15% 15% 15% 15% - - - - - - - -

- - - - - - 43,616.4 -

3,512 4,103 4,660 1,386 - - - -

- - - 4,071.55 5,800.08 5,842.36 16,505.28 -

9,158 9,852 11,274 13,273 13,331 16,830 20,691 18,699

695 1,421 1,999 3,059 3,498 3,861 41,625 00 0 0 3,000 0 0 43,616 0

9,852 11,274 13,273 13,331 16,830 20,691 18,699 18,699

3,000 3,000 3,000 0 0 0 0 00 0 0 0 0 0 0 0

1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,0002,013 2,516 2,894 3,559 3,737 3,812 0 02,050 1,940 1,840 1,740 1,640 1,540 0 0

150 75 0 0 0 0 0 031,976 31,976 31,976 31,976 31,976 31,976 31,976 31,976

40,189 40,507 40,710 38,275 38,353 38,328 32,976 32,976

8,994 5,547 1,292 - - - - - 19,965 21,962 24,158 22,502 18,952 15,005 0 0

36 47 58 69 80 91 14,277 14,2771,342 1,678 1,929 2,373 2,492 2,541 0 09,852 11,274 13,273 13,331 16,830 20,691 18,699 18,699

40,189 40,507 40,710 38,275 38,353 38,328 32,976 32,976

0 0 0 0 0 0 0 01 1 1 1 1 1 1 1

3,918.77 4,898.46 5,633.23 6,928.87 7,275.32 7,420.82 7,569.24 - 1,017.16 1,289.33 1,494.14 1,850.44 1,945.71 1,985.73 16,201.32 - 55.41 167.76 125.82 221.86 59.32 24.92 (1,270.69) - 100.00 100.00 100.00 100.00 100.00 100.00 100.00 - 12.10 11.55 11.00 11.00 11.00 11.00 14,185.78 - - - - - - - 52,984.67 - 2,758.30 3,352.93 3,924.27 4,767.58 5,181.28 5,321.18 59,709.05 -

3 4 5 6 7 8 9 10 3,512.03 4,103.14 4,660.20 5,457.85 5,800.08 5,842.36 - - 3,512.03 3,216.28 2,904.95 1,386.29 - - - - - 886.86 1,755.25 - - - - - - - - 4,071.55 5,800.08 5,842.36 - -

Exit Multiple 7.00 39.1% Mezz Debt 39%

J-Curve

Hold Per Equity IRR20.2%

3 Err:5234 -2.33%5 12.32%6 21.74%7 21.81%8 20.94%9 20.16%

10 19.60%

Senior Debt/Capital

11 19.17%12 18.84%

Senior IRR Project IRR7.30% 8.43%7.30% 7.96%7.30% 7.47%7.30% 6.97%7.30% 6.45%7.30% 5.93%7.30% 5.38%7.30% 4.82%7.30% 4.25%7.30% 3.64%7.30% 2.88%7.30% 2.05%7.30% 1.18%7.30% 0.26%7.30% -0.72%7.30% -1.76%7.30% -2.88%7.30% -4.09%7.30% -5.41%7.30% -6.88%7.30% -8.53%7.30% -52.06%6.80% -48.29%5.19%3.43%1.50%

-0.66%-3.13%-6.05%-9.64%

5% 5%24 7

22% 65%

Senior IRR Project IRR7% 8%7% 8%7% 7%7% 7%7% 6%7% 6%7% 5%7% 5%7% 4%7% 4%7% 3%7% 2%7% 1%7% 0%7% 0%7% 0%7% 0%7% 0%7% 0%7% 0%7% 0%7% 0%7% 0%5% 0%3% 0%1% 0%0% 0%0% 0%0% 0%0% 0%0% 0%0% 0%0% 0%0% 0%

11 12

7.30% 7.30%

10.00% 10.00%

27.50% 27.50%

60.00 60.0040.00 40.00

100 100

2% 2%1% 1%3% 3%2% 2%

100.00 100.00

3,200.00 3,200.002.46 2.51

100% 100%

- - 0.23 0.21

7,875.0 8,032.5

0 0

- - 60 60

16% 16%0.00 0.00

40.00 40.0011.0% 11.0%

0.00 0.00

0.00 0.00

0.00 0.00

15,000 15,000

- - - - - - - - - - - - - - - -

7.30% 7.30% - -

0 00 00 0

- - - -

0 0 - -

0.00% 0.00% - -

10.00% 10.00% - - - -

0 00 0

- - - - - - - - - -

6.50% 6.50% - -

0 00 00 00 00 0

10.00% 10.00%12.00% 12.00%

- - - -

- - - - - - - - - -

375 375

375 375

0.00% 0.00% - -

375 375 - -

- - - - - -

- -

0 00 0

- - - -

0 00 00 00 0

- - 0 0

- -

0 00 00 0

- -

0 00 00 0

- -

- -

27.50% 27.50% - - - - - -

14277.083 14277.0830 0

14277.083 14277.083

0 00 00 00 00 0

- - 0 0

- -

0 00 0

- - 0 00 00 0

- - 0 0

- - 0 0

- - 0 00 00 0

- - 0 0

- - 0 00 0

- -

0 0 - - - - - -

- - - -

1 1

- -

25% 25%11.641532 14.551915

- - - - - - - -

15% 15% - -

- -

- -

- -

18,699 18,699

0 00 0

18,699 18,699

0 00 0

1,000 1,0000 00 00 0

31,976 31,976

32,976 32,976

- - 0 0

14,277 14,2770 0

18,699 18,699 32,976 32,976

0 01 1

- - - - - - - - - - - - - -

11 12 - - - - - - - -

Sources and Uses 1

Pro Forma 1

Balance Sheet 1

Overall Integrity 1

Integrity

Equity IRRFrom To Hurdle Inst Inv

0% 25% 100%25% 100% 25% 85%

From To Incentive-100% 0% 0%

0% 10% 5%10% 50% 15%50% 500% 20%

1 2 3 4 5

Budget Income 100 100 100 100 100

Actutal Income 80 100 110 120 150

Percentage -20% 0% 10% 20% 50%

0% 5% 15% 15% 20%0% 5% 15% 15% 20%

3

Rachet Example

Mgmt0%

15%

50%10%

0%-100%

6

100

150

50%

20%20%

Assets 1000 Equity 1000

Assets 1,000 2,200Write-up 500Goodwill 700

Consideration 2,000Existing Equity -1000Goodwill 1,000Less: Asset-Write-up 500Goodwill 500Add: Fees 200

Goodwill Example

20%

48% -1000 0 0 500 4000

IRR Hurdle 20%

Pct of Excess 50%0 1 2 3 4

25% -1000 0 0 500 2441.4061 1.25 1.5625 1.953125 2.441406

Excess 1558.594

Mgr Pct 779.2969

Remiaing -1000 0 0 500 3220.703

41%

Sheet2

Company A 9Company B 9.5Company C 8.5

Median 9

Liquity Discount 25%

Terminal EV/EBITDA 6.751 2 3

100 300 500a b c

=INDEX(G15:I17,2,3)- 500

=INDEX(G15:G17,2)- 100

=INDEX(G 2 100

a

Index