Deal Lab · Buyout model 1.0
Haleon plc Buyout Model
A buyout of Haleon plc on its published figures for fiscal 2025, in pounds sterling: 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
6.0%
Multiple of money
1.34x
Sponsor's equity
£14.9bn
Enterprise value
£27.7bn
Proceeds at exit
£19.8bn
Sources and Uses
| Uses | Amount |
|---|---|
| Equity price | £20.4bn |
| Borrowings refinanced | £8.6bn |
| Transaction costs | £554m |
| Financing fees | £277m |
| Minimum cash | £221m |
| Uses | £30.0bn |
| Sources | Amount |
|---|---|
| Senior loan | £10.4bn |
| Subordinated notes | £3.5bn |
| Cash of the company | £1.3bn |
| Sponsor's equity | £14.9bn |
| Sources | £30.0bn |
Projection
| Closing | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|---|
| Revenue | £11.0bn | £11.0bn | £11.0bn | £11.0bn | £11.0bn | £11.0bn |
| EBITDA of the case | £2.8bn | £2.8bn | £2.8bn | £2.8bn | £2.8bn | £2.8bn |
| Cash cost of leases | £60.0m | £60.0m | £60.0m | £60.0m | £60.0m | £60.0m |
| Depreciation and amortisation | £360m | £360m | £360m | £360m | £360m | |
| Capital expenditure | £245m | £245m | £245m | £245m | £245m | |
| Increase in working capital | £0 | £0 | £0 | £0 | £0 | |
| Interest | £1.1bn | £1.0bn | £936m | £852m | £763m | |
| Tax | £330m | £349m | £369m | £390m | £412m | |
| Cash available for debt service | £2.1bn | £2.1bn | £2.1bn | £2.1bn | £2.1bn |
Debt Schedule
| Closing | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|---|
| Senior loan | £10.4bn | £9.4bn | £8.2bn | £7.1bn | £5.9bn | £4.6bn |
| Subordinated notes | £3.5bn | £3.5bn | £3.5bn | £3.5bn | £3.5bn | £3.5bn |
| Revolving facility | £0 | £0 | £0 | £0 | £0 | £0 |
| Cash | £221m | £221m | £221m | £221m | £221m | £221m |
| Debt to EBITDA | 5.00x | 4.62x | 4.23x | 3.81x | 3.36x | 2.90x |
| EBITDA to interest | 2.54x | 2.73x | 2.96x | 3.25x | 3.63x |
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 | 4.62x | 4.23x | 3.81x | 3.36x | 2.90x |
| Band of debt to EBITDA | Highly leveraged | Aggressive | Aggressive | Significant | Significant | Intermediate |
Return Bridge
| Amount | |
|---|---|
| Sponsor's equity | £14.9bn |
| EBITDA growth | £0 |
| Change of multiple | £0 |
| Net debt repaid | +£5.8bn |
| Non-controlling interests | £0 |
| Costs at closing | −£832m |
| Management and limited liability | £0 |
| Proceeds at exit | £19.8bn |
Sensitivity Tables
| Entry by exit | 8.00x | 9.00x | 10.0x | 11.0x | 12.0x |
|---|---|---|---|---|---|
| 8.00x | 9.1% | 12.8% | 16.1% | 19.1% | 21.8% |
| 9.00x | 3.5% | 7.3% | 10.5% | 13.5% | 16.1% |
| 10.0x | −0.8% | 2.8% | 6.0% | 8.8% | 11.3% |
| 11.0x | −4.2% | −0.7% | 2.3% | 5.0% | 7.5% |
| 12.0x | −7.0% | −3.6% | −0.7% | 2.0% | 4.4% |
| Debt by growth | −4.0% | −2.0% | 0.0% | 2.0% | 4.0% |
|---|---|---|---|---|---|
| 4.00x | −0.5% | 2.8% | 6.0% | 9.1% | 12.0% |
| 4.50x | −1.1% | 2.5% | 6.0% | 9.3% | 12.4% |
| 5.00x | −1.9% | 2.2% | 6.0% | 9.5% | 12.9% |
| 5.50x | −2.9% | 1.7% | 5.9% | 9.8% | 13.5% |
| 6.00x | −4.2% | 1.2% | 5.9% | 10.2% | 14.2% |
Solvers
Highest entry multiple for a return of 20.0%
4.17x
The target return
Revenue growth a year for a return of 20.0%
8.5%
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 | 3.8% | Policy rate of the United Kingdom, BIS central bank policy rates, 19 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 | 25.1% | EBITDA over revenue, fiscal 2025 |
| Operations | Cash cost of leases, of revenue | 0.5% | Cash cost of leases over revenue, fiscal 2025 |
| Operations | Depreciation and amortisation, of revenue | 3.3% | Depreciation and amortisation over revenue, fiscal 2025 |
| Operations | Capital expenditure, of revenue | 2.2% | Median capital expenditure over revenue, fiscal 2023 to 2025 |
| Operations | Working capital, of revenue | −5.9% | Working capital over revenue, end of the fiscal 2025 |
| 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 | 25.0% | Combined statutory rate of corporate income tax of the United Kingdom, 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 fiscal 2025, each with the documents it comes from.
| Input | Value | Method | Documents |
|---|---|---|---|
| Adjusted EBITDA | £2.9bn | Adjusted EBITDA of the company page | Annual financial report 2025-12 |
| Share-based pay | £86.0m | Share-based pay that adjusted EBITDA adds back | Annual financial report 2025-12 |
| EBITDA after share-based pay | £2.8bn | Adjusted EBITDA less share-based pay | Annual financial report 2025-12 |
| Depreciation and amortisation | £360m | Depreciation and amortisation of adjusted EBITDA | Annual financial report 2025-12 |
| Revenue | £11.0bn | Revenue of the base period | Annual financial report 2025-12 |
| Borrowings | £8.6bn | Total debt less lease liabilities | Annual financial report 2025-12 |
| Lease liabilities | £0 | Lease liabilities | Annual financial report 2025-12 |
| Cash and short-term investments | £1.3bn | Cash and short-term investments | Annual financial report 2025-12 |
| Non-controlling interests | £59.0m | Non-controlling interests | Annual financial report 2025-12 |
| Receivables | £2.1bn | Receivables | Annual financial report 2025-12 |
| Payables | £3.7bn | Payables | Annual financial report 2025-12 |
| Inventories | £1.0bn | Inventories | Annual financial report 2025-12 |
| Payments of lease liabilities | £60.0m | Payments of lease liabilities | Annual financial report 2025-12 |
| Interest on lease liabilities | £0 est. | Interest on lease liabilities at the average rate of finance costs on total debt | Annual financial report 2025-12 |
| Capital expenditure | £322m | Capital expenditure of the latest fiscal year | Annual financial report 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.