Deal Lab · Buyout model 1.0
Amazon.com, Inc. Buyout Model
A buyout of Amazon.com, Inc. on its published figures for the last 4 quarters to Q2 FY2026, in US dollars: revenue flat, the margin and the shares of revenue of that period, entry and exit at 10.0x EBITDA, exit after 5 years.
Returns
Internal rate of return
−1.7%
Multiple of money
0.92x
Sponsor's equity
$990bn
Enterprise value
$1.84tn
Proceeds at exit
$909bn
Sources and Uses
| Uses | Amount |
|---|---|
| Equity price | $1.74tn |
| Borrowings refinanced | $133bn |
| Transaction costs | $36.9bn |
| Financing fees | $16.5bn |
| Minimum cash | $15.5bn |
| Uses | $1.94tn |
| Sources | Amount |
|---|---|
| Senior loan | $619bn |
| Subordinated notes | $206bn |
| Cash of the company | $123bn |
| Sponsor's equity | $990bn |
| Sources | $1.94tn |
Projection
| Closing | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|---|
| Revenue | $776bn | $776bn | $776bn | $776bn | $776bn | $776bn |
| EBITDA of the case | $184bn | $184bn | $184bn | $184bn | $184bn | $184bn |
| Cash cost of leases | $15.4bn | $15.4bn | $15.4bn | $15.4bn | $15.4bn | $15.4bn |
| Depreciation and amortisation | $75.2bn | $75.2bn | $75.2bn | $75.2bn | $75.2bn | |
| Capital expenditure | $101bn | $101bn | $101bn | $101bn | $101bn | |
| Increase in working capital | $0 | $0 | $0 | $0 | $0 | |
| Interest | $66.0bn | $66.3bn | $66.7bn | $67.0bn | $67.4bn | |
| Tax | $7.1bn | $7.0bn | $6.9bn | $6.8bn | $6.7bn | |
| Cash available for debt service | $60.9bn | $61.0bn | $61.1bn | $61.2bn | $61.3bn |
Debt Schedule
| Closing | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|---|
| Senior loan | $619bn | $613bn | $606bn | $600bn | $594bn | $588bn |
| Subordinated notes | $206bn | $206bn | $206bn | $206bn | $206bn | $206bn |
| Revolving facility | $0 | $11.3bn | $22.8bn | $34.5bn | $46.6bn | $58.9bn |
| Cash | $15.5bn | $15.5bn | $15.5bn | $15.5bn | $15.5bn | $15.5bn |
| Debt to EBITDA | 5.00x | 5.03x | 5.06x | 5.09x | 5.12x | 5.15x |
| EBITDA to interest | 2.79x | 2.78x | 2.76x | 2.75x | 2.73x |
Covenants and the Credit View
| Closing | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|---|
| Limit of debt to EBITDA | 6.50x | |||||
| Lease-adjusted debt to EBITDA | 5.00x | 5.03x | 5.06x | 5.09x | 5.12x | 5.15x |
| Band of debt to EBITDA | Highly leveraged | Highly leveraged | Highly leveraged | Highly leveraged | Highly leveraged | Highly leveraged |
Return Bridge
| Amount | |
|---|---|
| Sponsor's equity | $990bn |
| EBITDA growth | $0 |
| Change of multiple | $0 |
| Net debt repaid | −$27.9bn |
| Non-controlling interests | $0 |
| Costs at closing | −$53.4bn |
| Management and limited liability | $0 |
| Proceeds at exit | $909bn |
Sensitivity Tables
| Entry by exit | 8.00x | 9.00x | 10.0x | 11.0x | 12.0x |
|---|---|---|---|---|---|
| 8.00x | −2.0% | 3.5% | 8.1% | 11.9% | 15.3% |
| 9.00x | −7.6% | −2.0% | 2.5% | 6.4% | 9.8% |
| 10.0x | −11.4% | −6.1% | −1.7% | 2.0% | 5.2% |
| 11.0x | −14.4% | −9.3% | −5.1% | −1.5% | 1.6% |
| 12.0x | −16.9% | −11.9% | −7.8% | −4.4% | −1.3% |
| Debt by growth | −4.0% | −2.0% | 0.0% | 2.0% | 4.0% |
|---|---|---|---|---|---|
| 4.00x | −7.7% | −3.9% | −0.3% | 3.1% | 6.3% |
| 4.50x | −9.4% | −4.9% | −0.9% | 2.8% | 6.3% |
| 5.00x | −11.5% | −6.3% | −1.7% | 2.4% | 6.3% |
| 5.50x | −14.3% | −8.0% | −2.7% | 2.0% | 6.3% |
| 6.00x | −18.6% | −10.3% | −3.9% | 1.5% | 6.3% |
Solvers
Highest entry multiple for a return of 20.0%
1.54x
The target return
Revenue growth a year for a return of 20.0%
12.2%
The target return
Debt capacity at closing, times EBITDA
6.00x
The loan to value limit
Assumptions and Their Origins
| Group | Assumption | Value | Origin |
|---|---|---|---|
| Transaction | Entry multiple | 10.0x | Convention of buyout 1.0 |
| Transaction | Years to exit | 5 years | Convention of buyout 1.0 |
| Transaction | Transaction costs | 2.0% | Convention of buyout 1.0 |
| Transaction | Financing fees | 2.0% | Convention of buyout 1.0 |
| Transaction | Minimum cash, of revenue | 2.0% | Convention of buyout 1.0 |
| Financing | Debt at closing, times EBITDA | 5.00x | Convention of buyout 1.0 |
| Financing | Debt at most, of the enterprise value | 60.0% | Convention of buyout 1.0 |
| Financing | Senior loan, of the new debt | 75.0% | Convention of buyout 1.0 |
| Financing | Senior loan repaid each year | 1.0% | Convention of buyout 1.0 |
| Financing | Cash sweep | 100% | Convention of buyout 1.0 |
| Financing | Revolving facility, times EBITDA | 1.00x | Convention of buyout 1.0 |
| Financing | Base rate | 3.9% | Policy rate of the United States, BIS central bank policy rates, 20 October 2026 |
| Financing | Senior loan spread | 3.5% | Convention of buyout 1.0 |
| Financing | Subordinated notes spread | 6.0% | Convention of buyout 1.0 |
| Financing | Revolving facility spread | 3.0% | Convention of buyout 1.0 |
| Financing | Covenant headroom on debt to EBITDA | 30.0% | Convention of buyout 1.0 |
| Financing | Minimum EBITDA to interest | 2.00x | Convention of buyout 1.0 |
| Operations | Revenue growth a year | 0.0% | Convention of buyout 1.0 |
| Operations | EBITDA margin | 23.8% | EBITDA over revenue, last 4 quarters to FY2026 Q2 |
| Operations | Cash cost of leases, of revenue | 2.0% | Cash cost of leases over revenue, last 4 quarters to FY2026 Q2 |
| Operations | Depreciation and amortisation, of revenue | 9.7% | Depreciation and amortisation over revenue, last 4 quarters to FY2026 Q2 |
| Operations | Capital expenditure, of revenue | 13.0% | Median capital expenditure over revenue, fiscal 2023 to 2025 |
| Operations | Working capital, of revenue | −2.7% | Working capital over revenue, end of the last 4 quarters to FY2026 Q2 |
| Operations | Leases as debt | Yes | Leases as debt, the basis of the credit metrics |
| Operations | Share-based pay added back | No | Convention of buyout 1.0 |
| Taxes | Tax rate | 25.5% | Combined statutory rate of corporate income tax of the United States, OECD Corporate Tax Statistics, 2026 |
| Taxes | Interest deducted up to 30% of EBITDA | No | Convention of buyout 1.0 |
| Exit | Exit multiple | 10.0x | Convention of buyout 1.0 |
| Exit | Management share of the proceeds | 0.0% | Convention of buyout 1.0 |
| Exit | Target return | 20.0% | Convention of buyout 1.0 |
Inputs and Their Documents
Published figures of the last 4 quarters to Q2 FY2026, each with the documents it comes from.
| Input | Value | Method | Documents |
|---|---|---|---|
| Adjusted EBITDA | $204bn | Adjusted EBITDA of the company page | 10-Q 2025-09, 10-K 2025-12, 10-Q 2026-03, 10-Q 2026-06 |
| Share-based pay | $19.3bn | Share-based pay that adjusted EBITDA adds back | 10-Q 2025-09, 10-K 2025-12, 10-Q 2026-03, 10-Q 2026-06 |
| EBITDA after share-based pay | $184bn | Adjusted EBITDA less share-based pay | 10-Q 2025-09, 10-K 2025-12, 10-Q 2026-03, 10-Q 2026-06 |
| Depreciation and amortisation | $75.2bn | Depreciation and amortisation of adjusted EBITDA | 10-Q 2025-09, 10-K 2025-12, 10-Q 2026-03, 10-Q 2026-06 |
| Revenue | $776bn | Revenue of the base period | 10-Q 2025-09, 10-K 2025-12, 10-Q 2026-03, 10-Q 2026-06 |
| Operating lease cost | $15.4bn | Operating lease cost | 10-Q 2025-09, 10-K 2025-12, 10-Q 2026-03, 10-Q 2026-06 |
| Borrowings | $133bn | Total debt less lease liabilities | 10-Q 2026-06 |
| Lease liabilities | $96.3bn | Lease liabilities | 10-Q 2026-06 |
| Cash and short-term investments | $123bn | Cash and short-term investments | 10-Q 2026-06 |
| Non-controlling interests | $0 | The balance sheet reports none | n/a |
| Receivables | $88.1bn | Receivables | 10-Q 2026-06 |
| Payables | $147bn | Payables | 10-Q 2026-06 |
| Inventories | $38.2bn | Inventories | 10-Q 2026-06 |
| Capital expenditure | $132bn | Capital expenditure of the latest fiscal year | 10-K 2025-12 |
Checks of the Model
- Sources equal uses
- The equity price is above nil
- The sponsor's equity is above nil
- Each balance of debt stays between nil and its amount at closing
- Cash is the cash of the year before and the cash flow of the year
- Cash stays at the minimum unless a shortfall is stated
- The 6 parts of the bridge add up to the proceeds less the sponsor's equity
- The cash flows at the internal rate of return have a present value of nil
Deal Lab computes arithmetic on published figures and on the assumptions of the user. It values no company, recommends no transaction and forecasts no result.