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Return Calculations Subordinated Loan With EBITDA Participation

1. This document outlines the structure and calculations for a subordinated loan with EBITDA participation. It includes inputs for the loan amount, interest terms, EBITDA projections, enterprise value calculation using an EBITDA multiple, and cash flows for determining return. 2. The summary calculates the total cash flows and internal rate of return for the FMO investment, which includes loan disbursements, interest received, equity proceeds at exit, and loan repayment. 3. It also calculates the cash flows and internal rate of return for other shareholders, which is based on their initial investment and return on the equity stake at exit.

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Amber Chavez
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48 views

Return Calculations Subordinated Loan With EBITDA Participation

1. This document outlines the structure and calculations for a subordinated loan with EBITDA participation. It includes inputs for the loan amount, interest terms, EBITDA projections, enterprise value calculation using an EBITDA multiple, and cash flows for determining return. 2. The summary calculates the total cash flows and internal rate of return for the FMO investment, which includes loan disbursements, interest received, equity proceeds at exit, and loan repayment. 3. It also calculates the cash flows and internal rate of return for other shareholders, which is based on their initial investment and return on the equity stake at exit.

Uploaded by

Amber Chavez
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLS, PDF, TXT or read online on Scribd
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Return calculations Subordinated loan with EBITDA participation

Grey cells contain hard inputs. Other cells contain references

Caution: First enable XIRR function by adding the Toolkit for VBA. Go to 'Tools' - 'Add-ins' - and check 'Analysis Toolpak - VBA'
Determine structure
A
Fill in loan amount/tranches and expected disbursement/repayment dates
B
Determine interest. Fixed during period or dependent on EBITDA or Net profit?
C
EBITDA from financial model company to determine exit value with EBITDA multiple
If other exit multiple is used, this should be adapted
D
Calculation enterprise value using EBITDA multiple. Use realistic exit multiple, in line with market multiples and entr
E
Enterprise value calculation EBITDA multiple * EBITDA
F
Equity value calculation deducting net debt (LT debt minus cash) from enterprise value
In addition to FMO debt, other debt should be deducted as well, if existing
G
Fill in number of warrants/equity received (i.e. less than 5% has tax effects)
H
Fill in expected exit date
I
Calculation of the return received by selling warrants at exit date

Calculate blended return FMO investment


Total cash flow to FMO consists of four elements:

For comparison, check what return to other investors is


Risk/return profile should be balanced and in line with FMO's return

A
B
C
D
E
F

Loan disbursment/cash outflow


Interest received (also account for accruals or bullet payment)
Exit value warrants/equity
Repayment of loan
Sum of all cash flows
Calculation internal rate of return of FMO investment

A
B

Calculation share other investors after warrant


Return calculation other shareholders

1.

12/31/2006
Outstanding loan amount
Drawdown/FMO disbursment

1,250
-1,250

3,750
-2,500

3,750

3,250
500

2,750
500

2,250
500

12.5%
65

12.5%
469
0%
0

12.5%
469
0%
0

12.5%
406
3%
98

12.5%
344
3%
83

12.5%
281
7%
158

36

417

2,068

2,107

4,213

252
3,750
8,000
-11,498

2,919
3,750
7,000
-7,831

14,476
3,250
6,000
5,226

14,749
2,750
4,000
7,999

29,491
2,250
3,500
23,741

2,849

Base interest
Base interest payment
EBITDA related margin
Additional interest

C
D

EBITDA
EBITDA multiple

EV
Net FMO debt
Net other LT debt company
Equity value 100%

G
H

Equity share
Exit date

Return equity on exit

2.

Total CF FMO

A
B

Debt amount
Interest
EBITDA interest
Equity
Repayment debt

-1,250
65
0
-1,000
0

-2,500
468.75
0
0
0

0
468.75
0
0
0

500
406.25
98
0
0

500
343.75
83
0
0

0
281.25
158
2,849
2,750

CF

-2,185

-2,031

469

1,004

926

6,038

C
D

IRR equity
Total IRR FMO

3.

Total CF shareholders

Share shareholders

Investment shareholders
Return equity stake
Total CF shareholders
IRR Shareholders

12.50%

year 0
year 1
year 2
year 3
year 4
year 5
6/1/2007 12/31/2008 12/31/2009 12/31/2010 12/31/2011 12/31/2012

12.0%
12/31/2012

6/1/2007 12/31/2008 12/31/2009 12/31/2010 12/31/2011 12/31/2012

21%
18.0%

12/31/2006

6/1/2007 12/31/2008 12/31/2009 12/31/2010 12/31/2011 12/31/2012

38.0%
-1200
-1,200
66.7%

0
0

0
0

20,892
20,892

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