In calculating our sources and uses of funds we start with the uses of funds here. We're already given the last 12 months EBITDA figure and an EV acquisition multiple. If I multiply the two together I should be able to get to the enterprise value. I know we've got underfunded pension deficit that'll need plugging, but we also need to work out the existing net debt of the target company on deal date. We've got that on the deal date tab. If we go to the deal date tab and we go down to the balance sheets, we can see that we have some historical long-term debt of 268.

I'm going to add on any revolving credit facility they had on that date. They actually had none. And then subtract off any cash they had on that date. They had 269.7. Now that's us almost done but we are going to have to have a minimum cash balance. So I'm going to add that in as an extra use of funds. I'm gonna include it within the net debt. So back to the input tab and we've got minimum cash balance down here in row 31, 30. So existing net debt is 29.2. I can now calculate the equity value as your enterprise value and then going to subtract off underfunded pension and subtract off existing net debt. So that's our major use of funds actually buying the company, it's equity value. We've then got an original issuer discount. To calculate it, I'll use the sum product formula. And if I go to the right hand side we've got lots of different debt items here that will require an original issuer discount. I'm gonna multiply those discount percentages, 1, 2, 3, 4 of them by the four debt items that go with them. There is actually a fifth so we'll just cheat and we'll add that on the end. The 1% multiplied by the 100 there, that's our mezzanine PIK note. So original issue discount comes to 12. We've always got some transaction fees. If we scroll down, we find they're going to be 2% of EV which is calculated EV. Got it. So what are our uses of funds? Well, first we have to buy the company. Then we have to plug their underfunded pension and existing net debt, pave the original issuer of discounts, transaction fees, and that's it. So if we add those items up, come to 1899.

Our total sources has to be the same figure. We've already got lots of our sources, debt, debt, debt and more debt, but we do need the plug to come from equity. So in order to find that equity, I'll take the 1899 but then say, ah, we've got some of it already. So Ill subtract out the debt we've already got and the remainder must be the equity item. If I total them up, we find that our total sources equals 1899 and our total uses also equaled 1899.