Just like in private equity, a dividend recap is one of the most popular scenarios you will be asked to model in private credit.
In this case, we will be providing the term loan B and all recap debt, if applicable.
Remember, really try to figure things out on your own before 'cheating' with the answer sheet. Think about what a dividend recapitalization is before diving headfirst. What part of the capital structure is being impacted?
Goal: complete the template in under 45 minutes, model from a blank sheet in under 1 hour. Try to summarize in 3 sentences or less why this would or would not be a good investment purely based on the output of the model.
Steps:
The_Pulse_LBO_Model_Dividend_Recap_Prompt PC.docx
The_Pulse_LBO_Dividend_Recap_Template_PC.xlsx
The_Pulse_LBO_Dividend_Recap_Answer_PC.xlsx
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Tip: A dividend recap is a cash outflow for the lender in the year that it happens. However, they're entitled to the principal repayment upon exit.