Hi! I am in a Private Equity class and I'm trying to model a company based on the information given and basic financial statements but I'm not entirely sure where to start. I would love someone to at least help me get started on how I should approach the problem. Attached is the premise of the company. Thank you. 
KBDP Partners KBDP Partners is considering buying a service-oriented business at the end of 2019. Selected income statement and balance sheet items are provided below. KBDP Partners expects revenue to grow annually at 20%. We assume that SG&A, AR, Inventory, CAPEX and Current Liabilities stay the same in dollar terms. Assume a tax rate of 33% and transaction fees of $1mm. Since this is a service-oriented business, D&A (Depreciation and Amortization) is not included when computing gross profit. They have negotiated an LOI to buy the business at 7x times EBITDA and in a worst case scenario expect to sell the business eventually at 5.5x. In addition they have lined up financing. Selected transaction capital sources are provided below. KBDP intends to use the maximum leverage available. A cash sweep is used to pay off debt. The acquisition and disposition of the business is structured a cash-free/ debt-free transaction. NOTES: 0) if you need to make assumptions, please state them and proceed, (ii) to answer the questions below we think it is helpful to create an income statement and cash flow statement of the business (and potentially a balance sheet), (ii) we assume that the seller delivers a cash-free balance sheet and that the existing debt is paid off by the seller. Selected Income Statement Items Item 2019 Close (dollar amounts in millions) $50 Revenues Gross Profit Margin 20% Annual SG&A $4 - Salaries $2.4 - Rent $0.2 - Other Expenses $1.4 Selected Balance Sheet Statement Items : KBDP Partners KBDP Partners is considering buying a service-oriented business at the end of 2019. Selected income statement and balance sheet items are provided below. KBDP Partners expects revenue to grow annually at 20%. We assume that SG&A, AR, Inventory, CAPEX and Current Liabilities stay the same in dollar terms. Assume a tax rate of 33% and transaction fees of $1mm. Since this is a service-oriented business, D&A (Depreciation and Amortization) is not included when computing gross profit. They have negotiated an LOI to buy the business at 7x times EBITDA and in a worst case scenario expect to sell the business eventually at 5.5x. In addition they have lined up financing. Selected transaction capital sources are provided below. KBDP intends to use the maximum leverage available. A cash sweep is used to pay off debt. The acquisition and disposition of the business is structured a cash-free/ debt-free transaction. NOTES: 0) if you need to make assumptions, please state them and proceed, (ii) to answer the questions below we think it is helpful to create an income statement and cash flow statement of the business (and potentially a balance sheet), (ii) we assume that the seller delivers a cash-free balance sheet and that the existing debt is paid off by the seller. Selected Income Statement Items Item 2019 Close (dollar amounts in millions) $50 Revenues Gross Profit Margin 20% Annual SG&A $4 - Salaries $2.4 - Rent $0.2 - Other Expenses $1.4 Selected Balance Sheet Statement Items
