Transaction Fees & Expenses

Let’s make some assumptions about the fees the target will pay to complete the LBO transaction. Typically, there is an advisory fee measured as a percentage of the transaction size, a financing fee associated with each tranche of debt calculated as a percentage of principal, and miscellaneous expenses of a fixed nature, such as legal and accounting fees. There may also be a fee paid to the sponsor.

 

Create Financial Models 10x Faster with Macabacus

Gain access to 100+ shortcuts, formula auditing visualizations, easy Excel-to-PowerPoint linking and productivity tools to help you accelerate financial modeling and presentations.

Start your Free Trial
 

For now, we will just set up our percentage and fixed-expense assumptions, since we do not yet have enough information about the capital structure to calculate financing and advisory fees in dollar amounts. However, there is one exception–the revolver–whose size we assumed in the previous step. Fees on the revolver are calculated as a percentage of the total committed amount, so we can calculate the revolver fee right away. We’ll revisit this section of the model later to compute the amortization of capitalized financing costs, which feeds into the pro forma P&L.

Download Template

Download Template

Transaction Fees & Expenses

Try Macabacus for free to accelerate financial modeling in Excel.

Discover more topics

Build an operating model
In this tutorial, we will walk through how to build a general industry business operating model.
Read more
Build an M&A model
In this section, we demonstrate how to model a merger of two public companies in Excel.
Read more
Build an LBO model
In this tutorial, we will walk you through building an LBO model in Excel.
Read more
Asset and Stock Deals
The first step in purchase price allocation, or PPA, is to determine the purchase price.
Read more