Now that we have completed our LBO analysis, we can see that our IRR is actually below the threshold of 20%. So what can we do with our analysis to bring that IRR up to 20%? Of course, one of the things you can do is you can make your assumptions about the company's future operational performance more optimistic. For example, you can increase revenue growth, you can increase your EBITDA margins. You can even make your assumptions about the company's operational improvements a bit higher. But there's another way you can increase your IRR, and that is related to how you structure your financing. So what I'm gonna show you here is how we can change the sources of funds or the financing structure of this deal to bring that IRR up to 20%. What I have already done in this model is I have added a new tranche of financing. So if we look at the sources of funds, you will see a new line called Preference or Preferred shares. So if we can raise money or include financing through preferred equity, we're gonna lower the need for common equity, and that's gonna help boost up the IRR of the private equity firm. Now we have a couple of assumptions here. We're gonna start assuming that we can raise $400 million worth of pre preference shares, and we have a cost of these shares of 12%, and this is in the form of a fixed dividend rate. Now this rate does not get paid out in cash. Instead, you accrue this dividend, meaning that your balance grows over time. So let's start by building out or amending our sources of funds if we're able to raise $400 million worth of preferred shares financing. Now, of course, my common equity formula will need to be adapted so that it will subtract the 400 million that we can get from this preference shares. So now we only need just under $3 billion worth of common equity. Next, we need to build out or forecast our preferred shared amount balance. And for that, we have a space right below our debt tranches, where I have added preference shares amount as well as the dividend that accrues every year. So let's start by bringing the initial amount down here. We can get this from the sources of funds, and that's 400 million. Now we need to compute our preferred dividends. Now in this case, we are gonna use our 12% assumption. We're gonna lock that in, and we're gonna multiply that times the beginning balance of our preference shares, which is last year's ending balance. And for year one, the dividends will be 48. So that means that our balance in year two, or in this case in 2026 for our preference shares will be 400 plus the 48. We can take this and we can copy it to the right all the way. And you can see how the balance increases every year because we are accruing those dividends. Now the last thing to do here is to go down to our returns analysis and incorporate these preference shares. Now remember, our private equity firm, or the client only gets the common equity value, which is down here, and that would be enterprise value minus net debt. But now we also have to subtract the payment to our preference shareholders. So let's first bring the balance of preference shares down here.

We can copy that to the right for all five years. And now let's adjust this formula here so that we also pay out the preferred shareholders.

And as you can see, the equity value of course, is gonna go down in year three. But if you look at the IRR, which already changed, the IRR has gone up from what we had before, which was 18.9% to very, very close to 20%. We're 19.8%. So all we need to do to reach that target is structure the financing so that we can raise more money through our preference shares and less money through our common shares. So let's go up to our sources of funds. Actually, let's go up to our assumptions all the way up. And instead of 400, let's assume that we can raise $600 million worth of preferred share financing. Now what happens is my IRR should improve slightly. And as you can see, my a RR has gone now beyond 20% at 20.3%.