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Leveraged buyout model for BMC
$ mm except per share
GENERAL INPUTS
Company name BMC
Ticker (if applicable) BMC
Current share price (if applicable) 45.42
Latest closing share price date (f applicable) 5/6/2013
Circuit breaker: OFF
USES OF FUNDS
Buyout of equity 6,741.9
Refinancing of oldco debt 1,306.0
Fees (transaction & financing) 204.5
Total Uses 8,252.5
SOURCES OF FUNDS
EBITDA turns $ investment
Excess cash 1.59x 1,401.9
Revolver 0.00x 0.0
Term Loan A 3.27x 2,886.4
Term Loan B 0.76x 670.9
Senior Note 1.85x 1,633.0
Sub Note 0.00x 0.0
Preferred stock 0.00x 0.0
Mgmt rollover 0.00x 0.0
Sponsor equity 1.88x 1,660.3
Total Sources 9.35x 8,252.5
x INCOME STATEMENT
Fiscal year 2011A 2012A 2013A
Fiscal year end date 3/31/11 3/31/12 3/31/13
EBITDA reconciliation
EBIT (GAAP) 532.8 543.9 465.4
Depreciation and amortization 190.0 224.6 229.0
Deal-related D&A
Stock based compensation 106.5 127.2 147.4
Restructuring and other nonrecurring charges 14.3 10.8 40.9
EBITDA 843.6 906.5 882.7
WORKING CAPITAL
Fiscal year 2012A 2013A
Fiscal year end date 3/31/12 3/31/13
Net income
Depreciation and amortization
Deal-related D&A
Stock based compensation
Changes in net working capital
Other assets & liabilities
Changes in deferred tax liabilities
Addback of PIK interest
Cash from operating activities
Capital expenditures
Purchases of intangible assets and capitalized software development costs
Cash from investing activities
Cash, BOP
Increases / (decreases)
Cash, EOP 1,635.6 1,581.9
Interest rate on cash 0.65% 0.52%
Interest income 10.6 8.3
Revolver
Cash, BOP
Less: Minimum cash desired
Equals: Excess cash at BOP
Plus: Free cash flows generated during period
Cash available (needed) to paydown (draw from) revolver
Revolver, BOP
Increases / (decreases)
Revolver, EOP % AR % Other Assets
Maximum availability 80% 65%
Compliance check
Term Loan A
Term Loan A, BOP
Mandatory paydown $
Cash sweep (paydown from excess cash flows)
Term Loan A, EOP
Mandatory paydown (% of original) % of available cash used
Cash sweep 100%
Term Loan B
Term Loan B, BOP
Mandatory amortization $
Cash sweep (paydown from excess cash flows)
Term Loan B, EOP
Mandatory paydown (% of original) % of available cash used
Cash available for cash sweep 100%
Senior Note
Senior Note, BOP
Mandatory amortization $
Senior Note, EOP
Mandatory paydown (% of original)
Sub Note
Sub Note, BOP
Mandatory amortization $ PIK rate Cash rate
PIK interest 4% 8%
Sub Note, EOP
Mandatory paydown (% of original)
Preferred stock
Preferred stock, BOP
PIK accrual
Preferred stock, EOP PIK rate Cash rate
Cash dividend 4% 8%
INTEREST EXPENSE
Fiscal year 2011A 2012A 2013A
Fiscal year end date 3/31/11 3/31/12 3/31/13
EXIT VALUATION
RETURNS
Cash-on-cash IRR Initial
Revolver NM 0% 0.0
Term Loan A 1.15x 5% (2,886.4)
Term Loan B 1.23x 5% (670.9)
Senior Note 1.41x 8% (1,633.0)
Sub Note at exit EBITDA multiple of:
6.3x NM 0% 0.0
6.8x NM 0% 0.0
7.3x NM 0% 0.0
7.8x NM 0% 0.0
8.3x NM 0% 0.0
Preferred Stock at exit EBITDA multiple of:
6.3x NM 0% 0.0
6.8x NM 0% 0.0
7.3x NM 0% 0.0
7.8x NM 0% 0.0
8.3x NM 0% 0.0
Management Equity at exit EBITDA multiple of:
6.3x NM 0% 0.0
6.8x NM 0% 0.0
7.3x NM 0% 0.0
7.8x NM 0% 0.0
8.3x NM 0% 0.0
Sponsor's Equity at exit EBITDA multiple of:
6.3x 3.43x 28% (1,660.3)
6.8x 3.80x 31% (1,660.3)
7.3x 4.17x 33% (1,660.3)
7.8x 4.54x 35% (1,660.3)
8.3x 4.91x 37% (1,660.3)
Revolver
Term Loan A
Term Loan B
Senior Note
Sub Note
Preferred stock
Mgmt rollover
Sponsor equity
Total
SENSITIVITY ANALYISIS
Actual
Sponsor Hurdle Rate (Minimum IRR) 33.05% 15.00%
Offer value 6,741.9 8,523
Diluted shares outstanding 146 146
Offer value / per share 46.25 58.47
% Premium / discount 2% 29%
Sponsor IRR At V
EXPLICIT OFFER PRICE / SHARE
33%
$45.00
Initial 45.25
Offer 45.50
Price: 45.75
46.00
Sponsor IRR @
33%
0%
Preferred 2%
Equity 4%
Kicker: 6%
8%
2012A
3/31/12
Cash 1,635.6
Accounts receivable, EOP 484.8
Other current assets, EOP 195.1
PP&E 87.8
Software development costs 244.7
Intangible assets 257.5
Goodwill and other assets 1,940.3
Total Assets 4,845.8
Equity, BOP
Plus: Net income
Less: Dividends
Plus: SBC
Equity, EOP
FEES
% fees Fee Term Fee amort / year
Financing fees
Revolver 1.0% 0.0 5 yrs 0.0
Term Loan A 1.5% 43.3 7 yrs 6.2
Term Loan B 1.5% 10.1 7 yrs 1.4
Senior Note 1.0% 16.3 8 yrs 2.0
Sub Note 0.0% 0.0 NM
Financing fees 69.7 9.7
Step
3.5% 5.5% 6.0% 5.0% 4.8%
74.5% 75.0% 75.5% 76.0% 76.5% 0.5%
8.1% 8.1% 8.1% 8.1% 8.1% 0.0%
42.4% 41.4% 40.4% 39.4% 38.4% (1.0%)
22.6% 22.6% 22.6% 22.6% 22.6% 0.0%
9.3% 9.1% 8.8% 8.6% 8.3% (0.3%)
Pro forma
2013A Pro forma adjustments 2013
3/31/13 Uses of funds Sources of funds Accounting 3/31/13
1,581.9 (8,252.5) 6,850.6 180.0
443.7 443.7
213.1 213.1
85.2 300.0 385.2
271.4 271.4
189.8 69.7 200.0 459.5
1,935.2 5,536.65 7,471.9
4,720.3 9,424.7
42.1 42.1
2,301.7 2,301.7
252.0 113.2 365.2
1,306.0 (1,306.0) 5,190 5,190.3
3,901.8 7,899.3
NM 0 0.0
818.5 (6,876.8) 1,660 5,923.4 1,525.4
819 1,525.4
0.0 (0.0)
General assumptions
Share price as of last close $46.25
Latest closing share price date 5/6/2013
Latest basic share count 143.973
Weighted average cost of capital 7.0%
Sensitivity analysis
Football field
multiple approach
1,227
e EBITDA multiple 7.3x
8,956
e of terminal value 6,652
e of stage 1 cash flows 3,144
9,796
erpetual growth rate (2.7%)
LBO Offer Perpetuity EBITDA
12,383 9,796
(5,010) (5,010)
6,742 7,373 4,785
145.771 145.771 145.771
$46.25 $50.58 $32.83
count) to LBO offer NM 9.4% (29.0%)
per share
rm growth rate (g):
3.5% 4.0%
21.2 23.3
27.6 30.2
35.6 39.2
46.1 51.1
60.5 67.9
81.2 93.0
per share
EBITDA Multiple
7.8x 8.3x
22.9 25.3
24.8 27.4
26.8 29.5
28.9 31.7
31.2 34.0
33.5 36.5
per share
EBITDA Multiple
7.3x 7.8x
52.0 54.0
55.7 58.1
59.5 62.1
63.3 66.1
67.0 70.1
1,472.6 1,472.6
Diluted shares for BMC
$ mm except per share
Options outstanding
Out. shares Exercise price In-the-$-shares
Tranche 1 0.2 15 0.2
Tranche 2 0.7 18 0.7
Tranche 3 0.1 22 0.1
Tranche 4 0.3 28 0.3
Tranche 5 0.3 32 0.3
Tranche 6 0.4 36 0.4
Tranche 7 1.3 39 1.3
Tranche 8 7.4 42 7.4
Tranche 9 0
Tranche 10 0
10.7
52 week high low