Sources and uses
What the deal costs and who funds it.
By Surojit Chakraverti, founder of L3VLUP and an investor running a long-short healthcare and technology equities strategy.
On this subject: sources and uses.Updated 30 September 2026
What it does
The opening balance sheet of a transaction. Uses are what has to be paid: the purchase price, fees, financing costs, any cash funded to the balance sheet or debt refinanced. Sources are where the money comes from: each debt tranche, rollover, and the equity cheque that balances the two. Leverage at close and the equity share of the deal are read straight off it.
Where it lives
The same schedule in each model that carries it, with the rows to open. Open a model in the browser, go to the sheet, and click the lines.
- Assumptions, rows 9–15: LTM revenue, LTM EBITDA margin, Entry multiple, EV / LTM EBITDA, Transaction fees, % of enterprise value…
- Sources & Uses, rows 5–10: LTM EBITDA, Purchase enterprise value, Transaction fees, Financing fees…
- Sources & Uses, rows 13–20: Revolver drawn, Term loan B, Senior notes, Total debt…
- Sources & Uses, rows 23–26: Total debt / LTM EBITDA, Equity, % of total sources, Net debt at close, Check: sources less uses
- Assumptions, rows 23–30: Offer premium to unaffected price, Consideration paid in acquirer stock, Cash consideration funded with new debt, Interest rate on new debt…
- Sources & Uses, rows 5–8: Purchase of target equity, Transaction fees, Financing fees, Total uses
- Sources & Uses, rows 11–15: New shares issued to target holders, New debt raised, Acquirer balance-sheet cash, Total sources…
- Sources & Uses, rows 18–19: Pro forma net debt, Pro forma net debt / Year 1 combined EBITDA
What a reviewer looks for
- Fees left out of uses, so the equity cheque is understated.
- A refinanced debt shown on one side but not the other.
- Sources typed to equal uses rather than one line being the balancing item.
Learn it, then build it
Understand · Primer
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Paper LBO Trainer
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Sit the one-hour test under a clock, in the browser or in your own workbook, and get every line of the build marked.
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Vocabulary: Leverage Model, Merger Model.