ABC Company, Inc.

Recapitalization Analysis
(figures in U.S. dollars, thousands)

Company Name:
Company Fiscal Year Ended:
Date of Transaction Analysis:
Date of Transaction Offer:
Pro Forma Year:
Sources of Funds
New Equity Sponsor
Rollover
New Mezzanine w/ Warrants

New Mezzanine w/ Warrants

New Senior Notes
New Revolving Credit Facility
Total Sources
Uses of Funds
Proceeds to Seller
Rollover
Balance Sheet Cash
Short-Term Notes Payable
Line of Credit
Longterm Debt
Advisory Fees
Financing Fees
Total Uses

Key Inputs & Assumptions

ABC Company, Inc.
12/31/14
9/25/14
12/31/14
2014
Amount
Ownership
5,000
80.0%
1,250
20.0%
---100.0%

1,035
2,070
3,105
$12,460
Amount
11,264
1,250
(1,554)
-1,000
500
--$12,460

Rate
10.0%
9.0%
8.0%

Rate

2.0%

Exit EBITDA Multiple:

Exit EBITDA Sensitivity:
Total Sources/2014E EBITDA:
Interest Rate (1=Avg., 2=Beg.,
Paydown Debt? ("Yes", "No")
Opt/Warr
--10.0%
3.0%
13.0%

Diluted
70.8%
26.5%
2.7%
100.0%

Debt / EBITDA
2014E
0.50x
1.00x
1.50x
3.00x

2015P
0.43x
0.87x
1.30x
2.61x

6.0x
1.0x
6.0x
3
No
%Sources
40.1%
10.0%
---

8.3%
16.6%
24.9%
100.0%
%Uses
90.4%
10.0%
(12.5%)
--8.0%
4.0%
----100.0%

Outputs
FYE Ended:
2017
2018
Summary of Equity Sponsor Returns
Trailing EBITDA Multiple
5.0x
6.0x
7.0x

25.6%
34.4%
42.2%

25.0%
31.1%
36.5%

2019

2020

24.4%
29.0%
33.0%

23.9%
27.5%
30.6%

17.6%
18.9%
20.1%

17.1%
18.2%
19.2%

$5,594
6,699
7,804

$6,771
8,042
9,313

Summary of Mezzanine Holder Returns

Trailing EBITDA Multiple
5.0x
6.0x
7.0x

19.9%
21.9%
23.8%

18.4%
20.0%
21.5%

Value of Management Stake

Trailing EBITDA Multiple
5.0x
6.0x
7.0x

$3,717
4,553
5,389

$4,583
5,544
6,505

Summary Credit Statistics

EBITDA/Tot. Int. Exp.

EBITDA-Capex/Tot. Int. Exp.
Total Debt/EBITDA
Senior Debt/EBITDA
Total Debt/Total Cap

2014PF
4.2x
3.2x
3.2x
2.5x
0.5x

2015P

2016P
4.8x
3.7x

5.6x
4.4x

2.8x
2.2x
0.5x

2.5x
1.9x
0.5x

ABC Company, Inc. Income Statement

(figures in U.S. dollars, thousands)
FYE December 31:

2013A

Net Sales
Sales Growth
COGS
Gross Profit
Gross Margin (% of Sales)

$15,000

2014E

2015P

2016P

2017P

2018P

2019P

2020P

9,000
6,000
40.0%

$17,250
15.0%
10,350
6,900
40.0%

$19,838
15.0%
11,903
7,935
40.0%

$22,813
15.0%
13,688
9,125
40.0%

$26,235
15.0%
15,741
10,494
40.0%

$30,170
15.0%
18,102
12,068
40.0%

$34,696
15.0%
20,818
13,878
40.0%

$39,900
15.0%
23,940
15,960
40.0%

SG&A Expense
% of Sales
Operating Profit (EBIT)

4,600
30.7%
1,400

5,290
30.7%
1,610

6,084
30.7%
1,852

6,996
30.7%
2,129

8,045
30.7%
2,449

9,252
30.7%
2,816

10,640
30.7%
3,238

12,236
30.7%
3,724

Depreciation & Amortization Expense

% of Sales
EBITDA
% of Sales

400
2.7%
1,800
12.0%

460
2.7%
2,070
12.0%

529
2.7%
2,381
12.0%

608
2.7%
2,738
12.0%

700
2.7%
3,148
12.0%

805
2.7%
3,620
12.0%

925
2.7%
4,164
12.0%

1,064
2.7%
4,788
12.0%

Net Interest Expense

Pretax Income (EBT)

150
1,250

150
1,460

498
1,354

486
1,643

471
1,977

453
2,363

431
2,807

405
3,319

Taxes
Effective Tax Rate
Net Income
% of sales

500
40.0%
750
5.0%

584
40.0%
876
5.1%

514
38.0%
839
4.2%

624
38.0%
1,019
4.5%

751
38.0%
1,226
4.7%

898
38.0%
1,465
4.9%

1,067
38.0%
1,740
5.0%

1,261
38.0%
2,058
5.2%

ABC Company, Inc. Cashflow Statement

(figures in U.S. dollars, thousands)
FYE December 31:

2014E

2015P

2016P

2017P

2018P

2019P

2020P

Net Income / (Loss)

Depreciation
Change in Accounts Receivable
Change in Inventory
Change in Prepaid Expenses
Change in Accounts Payable
Change in Accrued Expenses
Total Operating Activities

$876
460
(225)
(188)
(15)
75
30
$1,014

$839
529
(259)
(216)
(17)
86
35
$997

$1,019
608
(298)
(248)
(20)
99
40
$1,201

$1,226
700
(342)
(285)
(23)
114
46
$1,435

$1,465
805
(394)
(328)
(26)
131
52
$1,705

$1,740
925
(453)
(377)
(30)
151
60
$2,017

$2,058
1,064
(520)
(434)
(35)
173
69
$2,376

Capital Expenditures
Total Investing Activities

(460)
($460)

(529)
($529)

(608)
($608)

(700)
($700)

(805)
($805)

(925)
($925)

(1,064)
($1,064)

----------

----------

----------

----------

----------

----------

----------

554
1,000
$1,554

468
1,554
$2,022

592
2,022
$2,614

736
2,614
$3,350

901
3,350
$4,251

1,092
4,251
$5,342

1,312
5,342
$6,654

Dividends
Equity Issued
Short-Term Notes Payable
Change in Line of Credit
Change in Longterm Debt
New Mezzanine w/Warrants
New Senior Notes
New Revolving Credit Facility
Total Financing Activities
Change in Cash +/(-)
Beginning Cash Balance
Ending Cash Balance

ABC Company, Inc. Balance Sheet

(figures in U.S. dollars, thousands)
FYE December 31:
Minimum Cash
Cash & Cash Equivalents
Accounts Receivable
Inventory
Prepaid Expenses
Total Current Assets

1,000
1,500
1,250
100
3,850

1,554
1,725
1,438
115
4,831

$1,554
1,725
1,438
115
4,831

2015P
$500
$2,022
1,984
1,653
132
5,791

2016P
$500
$2,614
2,281
1,901
152
6,949

2017P
$500
$3,350
2,624
2,186
175
8,334

2018P
$500
$4,251
3,017
2,514
201
9,983

Net Property, Plant & Equipment

Intangible Assets / Goodwill
Deposits
Total Noncurrent Assets

1,000
--1,000

1,000
--1,000

1,000
7,934
-8,934

1,000
7,934
-8,934

1,000
7,934
-8,934

1,000
7,934
-8,934

Total Assets

4,850

5,831

13,765

14,725

15,883

500
200
700

575
230
805

575
230
805

661
265
926

760
304
1,065

--

--

--

--

Short-Term Notes Payable

Line of Credit
Longterm Debt
New Mezzanine w/ Warrants
New Senior Notes
New Revolving Credit Facility
Total Long-Term Debt

-1,000
500
---1,500

-1,000
500
---1,500

--500
1,035
2,070
3,105
6,710

Total Liabilities

2,200

2,305

7,515

Total Shareholders' Equity

2,650

3,526

6,250

7,089

Total Liabilities & Shareholders' Equity

Balance

4,850
0.000

5,831
0.000
0.000

13,765
0.000
0.000

14,725
0.000
0.000

Accounts Payable
Accrued Expenses
Total Current Liabilities
Other Non-Current Liabilities

2013A

2014E

2014PF

2019P
$500
$5,342
3,470
2,891
231
11,934

2020P
$500
$6,654
3,990
3,325
266
14,235

1,000
7,934
-8,934

1,000
7,934
-8,934

1,000
7,934
-8,934

17,268

18,917

20,868

23,169

875
350
1,224

1,006
402
1,408

1,157
463
1,619

1,330
532
1,862

--

--

--

--

--

--500
1,035
2,070
3,105
6,710

--500
1,035
2,070
3,105
6,710

--500
1,035
2,070
3,105
6,710

--500
1,035
2,070
3,105
6,710

--500
1,035
2,070
3,105
6,710

--500
1,035
2,070
3,105
6,710

7,636

7,775

7,934

8,118

8,329

8,572

8,108

9,334

10,799

12,539

14,597

15,883
0.000
0.000

17,268
0.000
0.000

18,917
0.000
0.000

20,868
0.000
0.000

23,169
0.000
0.000

ABC Company, Inc. Financial Statement Assumptions

(figures in U.S. dollars, thousands)
FYE December 31:

2013A

2014E

2015P

2016P

2017P

2018P

2019P

2020P

Capital Expenditures (% of Sales)

Capital Expenditures

2.7%
400

2.7%
460

2.7%
529

2.7%
608

2.7%
700

2.7%
805

2.7%
925

2.7%
1,064

Assets (Sales days)

Accounts Receivable
Inventory
Prepaid Expenses

36.5
50.7
2.4

36.5
50.7
2.4

36.5
50.7
2.4

36.5
50.7
2.4

36.5
50.7
2.4

36.5
50.7
2.4

36.5
50.7
2.4

36.5
50.7
2.4

Liabilities (COGS days)

Accounts Payable
Accrued Expenses

20.3
8.1

20.3
8.1

20.3
8.1

20.3
8.1

20.3
8.1

20.3
8.1

20.3
8.1

20.3
8.1

5.5x
2,150

6.0x
2,473
323

6.3x
2,843
371

6.5x
3,270
427

6.8x
3,760
490

7.1x
4,324
564

7.4x
4,973
649

7.6x
5,719
746

Working Capital
Current Ratio
Net Working Capital
Change in Net Working Capital