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1. The shareholders (seller) of Company W wants to sell W. It has 2 similar proposals: structured deals - upfront cash and future residual proceeds. Company W basic info: shareholders of Company W has Holdco debt.:104. 2023 EBITDA:30. EBITDA 6x-7x, Opco debt 25, cash 10 Future residual shares exit year: 2024 Your task is to calculate the net proceeds for the shareholder for each proposal. Compare the 2 proposals and make recommendation on which one is better. Investor A: will use its own equity of 82, rest of the acquisition costs will use debt 1. $120 up-front Equity Value: $118 would be payable up- front at the close of the transaction ii. $12 deferred: $12 of deferred consideration that would begin participating after buyer's achievement of a 2x liquidation preference on its initial investment. After buyer's 2x liquidation preference on its initial investment, the Company W's current equity holders would receive 88% of Investor A: will use its own equity of 82, rest of the acquisition costs will use debt i. $120 up-front Equity Value: $118 would be payable up- front at the close of the transaction ii. $12 deferred: $12 of deferred consideration that would begin participating after buyer's achievement of a 2x liquidation preference on its initial investment. After buyer's 2x liquidation preference on its initial investment, the Company W's current equity holders would receive 88% of incremental proceeds thereafter until $12 was realized, with buyer receiving the other 12% of this value tranche. iii. 12% of incremental value: Thereafter, incremental proceeds would be allocated according to the equity % Investor B: will use its own equity of 80, rest of the acquisition will use debt At closing, buyer and seller would comprise 88.5% and 11.5% of all membership interests in Newco, respectively. The initial distribution to the seller at closing would be approximately $116. Second, to buyer until it has received total distributions equal to 2.00x its cash equity contribution at closing: Third, 88.5% to seller and 11.5% to buyer until the total distributions to the seller and buyer are allocated 88.5% to bewer and 11 50% te collar incremental proceeds thereafter until $12 was realized, with buyer receiving the other 12% of this value tranche. iii. 12% of incremental value: Thereafter, incremental proceeds would be allocated according to the equity % Investor B: will use its own equity of 80, rest of the acquisition will use debt At closing, buyer and seller would comprise 88.5% and 11.5% of all membership interests in Newco, respectively. The initial distribution to the seller at closing would be approximately $116. Second, to buyer until it has received total distributions equal to 2.00x its cash equity contribution at closing; Third, 88.5% to seller and 11.5% to buyer until the total distributions to the seller and buyer are allocated 88.5% to buyer and 11.5% to seller; d. Thereafter, to the seller and buyer in proportion to the respective number of 11.5%/88.5%

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