Let's see how a leveraged finance team would consider structuring a buyout or a levered acquisition. The concept of debt capacity is understanding a company's ability to lever to a desirable level. That level can be a function of many things. Maximizing an equity sponsor return, maintaining a certain credit rating, leaving the company comfortable, breathing room after all of its fixed charges. It can also be driven entirely by the credit markets, their appetite for a certain kind of loan or credit. The key metric is debt to EBITDA. This ratio is a hybrid of a coverage ratio and a leverage ratio, and that it implies how quickly a company can pay back debt with a static amount of EBITDA, typically based on an achieved or LTM amount last 12 months, but adjusted to be considered more pro forma. That range in the high yield world can run from four to seven times. Again, keep in mind that many sub investment grade companies have lower leverage multiples than this. This just refers to the maximum levels. Also, this multiple is a function of the company itself and the nature of its risk. Retailers, for example, have a lower debt capacity multiple than a stable industrial company. Regardless of what is being done in the market as a whole, the leverage ratio for comparable companies in the industry is going to hold more sway. Within the leverage multiple we see that the tranches of debt, as they're called, have their own limits. The deal is usually structured around the senior or the term debt, as that is the cheapest, and often the class of debt that has the highest multiple. Senior debt is usually capped at around 3 to 5x. Term loans themselves generally cap out at three to four times. The junior debt brings up the remaining one to two times. This can be junior bonds or mezzanine. We can see this in the hypothetical deal in the center of the slide.