Now we can come to Red Bull and build the leverage buyout model. To start, we need to finish the assumptions. A key number that we need to pull in is the last 12 months EBITDA, which for Red Bull is going to be the historical years EBITDA in 2023. So we can get that from the three statement model that we've built for Red Bull, using the company information and go up to the income statement and get the EBITDA and the last historical year that will form the basis of the valuation. The reason we're using an LTM EBITDA for an LBO valuation rather than a forward multiple, is so much of the structure is financed by debt and the credit markets use LTM multiples. It seems reasonable to approach the valuation using LTM multiple rather than a forward multiple because nearly 70% of the capital structure and many transactions is debt financed. Not so in this case, because currently the company's trading at about 25 times and we can only maximum raise 6 times in debt. The next assumption is we need to assume what exit multiple we will be able to sell the business at. Now we can, in this case, link it to the entry multiple. And the only reason we can do that is that the business is not materially changing between the purchase date and the exit date. Growth isn't slowing. This is already a fairly mature business except it's very highly valued business at 25 times EBITDA. But we expect to be able to sell the business on a similar multiple that we bought it for. That's not always the case. In some cases where growth is slowing, you may need to be able to sell the business for a lower multiple than you purchased it for. So you need to think very carefully about what exit multiple seems reasonable. The next thing we've got here is the risk-free rate. And the risk-free rate is going to come from our WACC model, which is the 10 year government bond. And the reason we're pulling in the risk-free rate is it we'll price bonds off that risk-free rate. So we're going to link the cost of the senior debt to the risk-free rate, and we'll take a spread above that for our unsecured notes, which are going to have a fixed assumption there at 7.25%. If we are doing a bank loan, then the bank loan will particularly priced off SOFR. That's a secured overnight funding rate or SONIA if you're in the UK. Next, we've got the sources and uses of funds to do and our enterprise value. We are going to take the LTM EBITDA and multiply that by the entry multiple that we're assuming at 25 times.

So this means we're buying Red Bull for about 78 billion Euro. We have some fees and the fee assumption assumptions down below at 1% of enterprise value. That's probably a little light in their leverage buyout. The bulk of those fees will be related to the financing, mostly the debt financing. There'll be some fees for accountants, lawyers, and advisory fees too. We need to raise a total of about 79 billion Euros. On the right hand side, we've got an implicit assumption for the senior debt tranche, and we're assuming of the six times debt financing. Four times is gonna be from the senior structure. So this means we can plug the difference to the unsecured notes by taking our six times assumption less the four times. So our senior notes are going to be the four times the LTM EBITDA about 12 and a half billion Euro. And the unsecured notes are gonna be two times our LTM EBITDA. That's an initial assumption. We may need to change that when we look at the repairability of the debt structure over the seven year forecast period. Because that senior debt needs to be completely paid off within the seven years and at least 50% of the structure needs to be paid off within seven years. That's the debt structure. So we are making these initial assumptions using an EBITDA multiple, but this is before we've looked at the ability of the structure to repay enough debt that will meet the structuring guidelines. The last component of the sources and uses is the equity tranche, and we'll make the equity tranche a plug. So we'll take the total uses of funds minus the senior debt financing and minus the unsecured notes financing. The reason we do this is that if the private equity fund wants to bid more for the company, in this case Red Bull, they can't go back to the bank and say, will you lend us more money? The bank simply won't do that. The bank will give their best funding number forward, and once that's done, they won't revisit it. So if the fund wants to pay more for the business, they will have to put more equity into the structure. So the more equity they put in, of course the less returns they will get. And that's how we will approach the valuation. What is the maximum price that they can pay while still getting a reasonable return on the equity investment? So our total uses of funds is the sum of those three numbers, and we need to check that the sources and uses funds balance, and it should always do in a transaction model like this.