Walk me through the Sources and Uses table.
A core Private Equity interview question — asked in analyst and associate interviews across IB, PE, and the Big 4.
THE SHORT ANSWER
The Sources and Uses table summarizes how a transaction is financed and what the funds are used for. Uses include the Purchase Price (Enterprise Value), Transaction Fees, Refinanced Debt, and Cash to Balance Sheet. Sources include Debt Tranches (senior, subordinated, mezzanine), Sponsor Equity, and Management Rollover. Sources must equal Uses.
WHAT INTERVIEWERS LISTEN FOR
- ✓Sources must equal Uses
- ✓Uses include purchase price, fees, refinanced debt, cash to BS
- ✓Sources include debt tranches, sponsor equity, management rollover
COMMON MISTAKES
- ✗Forgetting to include transaction fees in Uses
- ✗Mismatch between Sources and Uses
- ✗Omitting management rollover or cash to balance sheet
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