"""Capital Structure Builder for LBO""" from typing import Dict, Any, List, Optional from dataclasses import dataclass @dataclass class DebtTranche: """Debt tranche structure""" name: str amount: float interest_rate: float amortization_years: float type: str # 'Revolver', 'Term Loan A', 'Term Loan B', 'Senior Notes', 'Subordinated', 'Mezzanine' mandatory_amortization: float = 0 sweep_percentage: float = 0 class CapitalStructureBuilder: """Build and analyze LBO capital structure""" def __init__(self, entry_enterprise_value: float, entry_ebitda: float): self.entry_ev = entry_enterprise_value self.entry_ebitda = entry_ebitda self.debt_tranches: List[DebtTranche] = [] self.sponsor_equity = 0 self.rollover_equity = 0 self.management_equity = 0 def add_debt_tranche(self, name: str, amount: float, interest_rate: float, amortization_years: float, debt_type: str, mandatory_amortization: float = 0, sweep_percentage: float = 0) -> DebtTranche: """Add debt tranche to capital structure""" tranche = DebtTranche( name=name, amount=amount, interest_rate=interest_rate, amortization_years=amortization_years, type=debt_type, mandatory_amortization=mandatory_amortization, sweep_percentage=sweep_percentage ) self.debt_tranches.append(tranche) return tranche def set_equity(self, sponsor_equity: float, rollover_equity: float = 0, management_equity: float = 0): """Set equity components""" self.sponsor_equity = sponsor_equity self.rollover_equity = rollover_equity self.management_equity = management_equity def calculate_leverage_metrics(self) -> Dict[str, float]: """Calculate leverage and coverage metrics""" total_debt = sum(t.amount for t in self.debt_tranches) total_equity = self.sponsor_equity + self.rollover_equity + self.management_equity senior_debt = sum(t.amount for t in self.debt_tranches if t.type in ['Revolver', 'Term Loan A', 'Term Loan B', 'Senior Notes']) subordinated_debt = total_debt - senior_debt return { 'total_debt': total_debt, 'total_equity': total_equity, 'total_capital': total_debt + total_equity, 'debt_to_ebitda': total_debt / self.entry_ebitda if self.entry_ebitda else 0, 'senior_debt_to_ebitda': senior_debt / self.entry_ebitda if self.entry_ebitda else 0, 'total_debt_to_capital': (total_debt / (total_debt + total_equity) * 100) if (total_debt + total_equity) else 0, 'equity_to_capital': (total_equity / (total_debt + total_equity) * 100) if (total_debt + total_equity) else 0, 'sponsor_equity_contribution': self.sponsor_equity, 'rollover_equity': self.rollover_equity, 'management_equity': self.management_equity } def build_capital_structure_table(self) -> Dict[str, Any]: """Build detailed capital structure table""" leverage_metrics = self.calculate_leverage_metrics() debt_details = [] for tranche in self.debt_tranches: debt_details.append({ 'name': tranche.name, 'type': tranche.type, 'amount': tranche.amount, 'percentage_of_total': (tranche.amount / leverage_metrics['total_capital'] * 100), 'interest_rate': tranche.interest_rate * 100, 'amortization_years': tranche.amortization_years }) equity_details = [ { 'name': 'Sponsor Equity', 'amount': self.sponsor_equity, 'percentage_of_total': (self.sponsor_equity / leverage_metrics['total_capital'] * 100) }, { 'name': 'Rollover Equity', 'amount': self.rollover_equity, 'percentage_of_total': (self.rollover_equity / leverage_metrics['total_capital'] * 100) }, { 'name': 'Management Equity', 'amount': self.management_equity, 'percentage_of_total': (self.management_equity / leverage_metrics['total_capital'] * 100) } ] return { 'entry_enterprise_value': self.entry_ev, 'entry_ebitda': self.entry_ebitda, 'entry_multiple': self.entry_ev / self.entry_ebitda if self.entry_ebitda else 0, 'debt_tranches': debt_details, 'equity_components': equity_details, 'leverage_metrics': leverage_metrics, 'total_sources': leverage_metrics['total_capital'] } def calculate_annual_interest_expense(self, year: int = 1) -> float: """Calculate annual interest expense""" total_interest = 0 for tranche in self.debt_tranches: outstanding_balance = tranche.amount if year > 1 and tranche.mandatory_amortization > 0: years_elapsed = min(year - 1, tranche.amortization_years) amortized = tranche.amount * tranche.mandatory_amortization * years_elapsed outstanding_balance = max(0, tranche.amount - amortized) total_interest += outstanding_balance * tranche.interest_rate return total_interest def optimize_capital_structure(self, target_leverage: float, max_leverage: float = 7.0) -> Dict[str, Any]: """Optimize capital structure for target leverage""" target_debt = target_leverage * self.entry_ebitda target_debt = min(target_debt, max_leverage * self.entry_ebitda) equity_needed = self.entry_ev - target_debt typical_structure = { 'Revolver': 0.05, 'Term Loan A': 0.20, 'Term Loan B': 0.50, 'Senior Notes': 0.15, 'Subordinated': 0.10 } self.debt_tranches = [] for debt_type, allocation in typical_structure.items(): amount = target_debt * allocation if debt_type == 'Revolver': interest_rate = 0.04 amort = 5 elif debt_type == 'Term Loan A': interest_rate = 0.045 amort = 5 elif debt_type == 'Term Loan B': interest_rate = 0.055 amort = 7 elif debt_type == 'Senior Notes': interest_rate = 0.060 amort = 10 else: interest_rate = 0.085 amort = 10 self.add_debt_tranche( name=debt_type, amount=amount, interest_rate=interest_rate, amortization_years=amort, debt_type=debt_type ) self.set_equity(sponsor_equity=equity_needed * 0.85, rollover_equity=equity_needed * 0.10, management_equity=equity_needed * 0.05) return self.build_capital_structure_table() if __name__ == '__main__': builder = CapitalStructureBuilder( entry_enterprise_value=5_000_000_000, entry_ebitda=625_000_000 ) optimized = builder.optimize_capital_structure(target_leverage=5.5) print(f"Entry Multiple: {optimized['entry_multiple']:.2f}x") print(f"Total Debt/EBITDA: {optimized['leverage_metrics']['debt_to_ebitda']:.2f}x") print(f"Debt %: {optimized['leverage_metrics']['total_debt_to_capital']:.1f}%") print(f"Equity %: {optimized['leverage_metrics']['equity_to_capital']:.1f}%")