Capital Stack Challenge
You are handed the Uses side of a real buyout and the tranches that market offered. Fill the Sources side: revolver, term loans, secured and unsecured notes, PIK, a vendor note, the company’s own cash, rollover, and whatever is left for the sponsor to write. Lock it, and the sponsor’s real structure is revealed beside yours. Then one thing goes wrong, and you get to answer it.
Scored on four things, not one: cash interest, the equity cheque and return, downside coverage, and flexibility. The cheapest debt wins the first and loses the other three. 7 cases from 2006 to 2026, every figure linked to the 8-K, proxy or prospectus it came from.
Choose a deal
Every case is a real public buyout with its numbers taken from the filings. Recent deals first.
On the tape
All deal news →Recent acquisition announcements from the primary wires. Read the press release, then the 8-K: the financing section is where the capital stack lives.
- $38MRedHill Announces Transformational Acquisition of Commercialization Rights to Ferring's Rebyota® and Clenpiq®
- $18MRedHill Divests Talicia® to Apotex for $18 Million Cash Upfront Plus Milestones to Fuel Strategic Growth Opportunities
- $4.4BONEOK to Acquire Brazos Midstream's Permian Midland Basin Assets for $4.425 Billion
- $7BJLL Income Property Trust Acquires Tuscaloosa Alabama Shopping Center
- $628MMatterhorn Venture Partners Acquires Chicago Area Industrial Portfolio
- $535MGreenberg Traurig Advises Global Net Lease on $535M Modiv Industrial Acquisition
- $221MKimbell Royalty Partners Closes $221.2 Million Drop Down Acquisition
Why the score is not the interest bill
Scored on cash interest alone, every player would fill the stack with the cheapest tranche and stop. Real lenders never see that structure, because the cheap tranche amortises, floats, or has a cap. The returns bucket rewards a small cheque and the uplift leverage adds to the unlevered return; the downside bucket runs every structure through EBITDA down 15% and rates up 150 bps; the flexibility bucket asks what you can repay early and what matures first.
Where the numbers come from
Purchase price, committed facilities and the equity cheque come from the 8-K and merger proxy. Tranche sizes and coupons come from the closing 8-K, the credit agreement or the exchange-offer prospectus. EBITDA comes from the annual report or the results release. Where only market reporting records a coupon, the source says so. The deal file on each case lists them all.
What is simplified
One growth rate, one exit multiple equal to entry, a five-year hold, a 75% sweep of excess cash flow to the loans, and euro tranches at their dollar equivalents. Call premiums on the notes, hedging, and the tax detail of an actual structure are left out. The paper LBO trainer covers the returns arithmetic on its own; this is the financing decision.