Conduct an LBO with investment holding period of five years. The transaction date is assumed to be as of December 31st, 2023. You'll utilize financial data up until Q4 2023, and THS's stock price as of December 29th, 2023 ($41.45) to derive the Company Equity and Enterprise Value (EV).

 

Conduct an LBO with investment holding period of five years. The transaction date is assumed to be as of December 31st, 2023. You'll utilize financial data up until Q4 2023, and THS's stock price as of December 29th, 2023 ($41.45) to derive the Company Equity and Enterprise Value (EV).

 https://drive.google.com/file/d/1UhOHQamh6IFKo03C5w1UkT560aqfbj0K/view?usp=drive_link
https://drive.google.com/file/d/1xc3nIUWbBBoWNzG-QPAQvialcbRpa5Wv/view?usp=drive_link

Requirements: Please prepare the following components:

1. Sources and Uses of Funds Table: Present a table illustrating how much debt and equity will be used in the purchase transaction.
2. 5-Year Projected Financial Statements: Create projections for the business for the next five years. A summary model that consolidates various financial statement lines, including the Income Statement, Balance Sheet, and Cash Flow Statement, is acceptable.
3. Analysis of IRRs and Returns: Analyze Internal Rates of Return (IRRs) and returns to the buyer upon exit under different assumptions (Scenario Analysis).
4. Written Judgment: Provide a brief written assessment, based on your evaluation of the business and the returns predicted in your model, regarding whether THS is a suitable candidate for a take-private transaction.

 

Assumptions: Please use the following assumptions to build your LBO model:

• Offer Premium: 20%
• Basic Shares = Diluted Shares
• LTM EV/EBITDA (Entry Multiple) = Exit Multiple
• Transaction Fees: 1.5%
• Tax Rate: 22%
• Cash Sweep: 75%
• Debt Sources: 7-Year Tenor
  • No Revolver
  • Term Loan: 6x LTM EBITDA
  • PIK Note: 2x LTM EBITDA
• Sponsor Equity (% of Equity): The difference between Total Uses and the above two Sources. 

Data and Public Filings: Make use of additional data and public filings to find historical data justify your forecasted numbers. Candidates should manage their time effectively and make reasonable assumptions when required, given the four-hour time limit.