Corporate Valuation & Financial Modeling Excellence
Valuing a commercial enterprise requires estimating future Unlevered Free Cash Flows (UFCF) and discounting them to Present Value using the Weighted Average Cost of Capital (WACC).
1. WACC Mathematical Formula
WACC = (E / V × Re) + [D / V × Rd × (1 - Tax Rate)]
2. LBO Capital Structure Breakdown
| Debt Tranche | Leverage Multiple (x EBITDA) | Interest Rate Type |
|---|---|---|
| Revolving Credit Facility | 0.5x – 1.0x | SOFR + 200 bps (Floating) |
| First Lien Senior Debt | 3.0x – 4.0x | SOFR + 350 bps (Floating) |
| Mezzanine / Subordinated Debt | 1.0x – 1.5x | 12% Fixed (Cash + PIK) |
| Sponsor Equity Contribution | Remaining (30% – 40%) | Targeted 20%+ IRR |