Deal Lab · Buyout model 1.0
Micron Technology, Inc. Buyout Model
A buyout of Micron Technology, Inc. on its published figures for fiscal 2025, 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
−4.0%
Multiple of money
0.82x
Sponsor's equity
$97.6bn
Enterprise value
$183bn
Proceeds at exit
$79.7bn
Sources and Uses
| Uses | Amount |
|---|---|
| Equity price | $178bn |
| Borrowings refinanced | $14.6bn |
| Transaction costs | $3.7bn |
| Financing fees | $1.8bn |
| Minimum cash | $748m |
| Uses | $198bn |
| Sources | Amount |
|---|---|
| Senior loan | $68.0bn |
| Subordinated notes | $22.6bn |
| Cash of the company | $10.3bn |
| Sponsor's equity | $97.6bn |
| Sources | $198bn |
Projection
| Closing | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|---|
| Revenue | $37.4bn | $37.4bn | $37.4bn | $37.4bn | $37.4bn | $37.4bn |
| EBITDA of the case | $18.3bn | $18.3bn | $18.3bn | $18.3bn | $18.3bn | $18.3bn |
| Cash cost of leases | $153m | $153m | $153m | $153m | $153m | $153m |
| Depreciation and amortisation | $8.4bn | $8.4bn | $8.4bn | $8.4bn | $8.4bn | |
| Capital expenditure | $12.5bn | $12.5bn | $12.5bn | $12.5bn | $12.5bn | |
| Increase in working capital | $0 | $0 | $0 | $0 | $0 | |
| Interest | $7.2bn | $7.4bn | $7.6bn | $7.7bn | $7.9bn | |
| Tax | $644m | $605m | $565m | $522m | $477m | |
| Cash available for debt service | $5.0bn | $5.0bn | $5.1bn | $5.1bn | $5.2bn |
Debt Schedule
| Closing | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|---|
| Senior loan | $68.0bn | $67.3bn | $66.6bn | $65.9bn | $65.2bn | $64.6bn |
| Subordinated notes | $22.6bn | $22.6bn | $22.6bn | $22.6bn | $22.6bn | $22.6bn |
| Revolving facility | $0 | $2.9bn | $6.0bn | $9.1bn | $12.4bn | $15.8bn |
| Cash | $748m | $748m | $748m | $748m | $748m | $748m |
| Debt to EBITDA | 5.00x | 5.12x | 5.25x | 5.39x | 5.53x | 5.68x |
| EBITDA to interest | 2.52x | 2.47x | 2.42x | 2.37x | 2.31x |
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 | 5.12x | 5.25x | 5.39x | 5.53x | 5.68x |
| Band of debt to EBITDA | Highly leveraged | Highly leveraged | Highly leveraged | Highly leveraged | Highly leveraged | Highly leveraged |
Return Bridge
| Amount | |
|---|---|
| Sponsor's equity | $97.6bn |
| EBITDA growth | $0 |
| Change of multiple | $0 |
| Net debt repaid | −$12.4bn |
| Non-controlling interests | $0 |
| Costs at closing | −$5.5bn |
| Management and limited liability | $0 |
| Proceeds at exit | $79.7bn |
Sensitivity Tables
| Entry by exit | 8.00x | 9.00x | 10.0x | 11.0x | 12.0x |
|---|---|---|---|---|---|
| 8.00x | −5.6% | 0.7% | 5.8% | 10.0% | 13.6% |
| 9.00x | −11.4% | −4.9% | 0.2% | 4.4% | 8.0% |
| 10.0x | −15.1% | −8.9% | −4.0% | 0.1% | 3.6% |
| 11.0x | −18.0% | −12.0% | −7.3% | −3.4% | 0.0% |
| 12.0x | −20.4% | −14.6% | −10.0% | −6.2% | −2.9% |
| Debt by growth | −4.0% | −2.0% | 0.0% | 2.0% | 4.0% |
|---|---|---|---|---|---|
| 4.00x | −9.7% | −5.7% | −2.1% | 1.3% | 4.5% |
| 4.50x | −11.6% | −7.1% | −2.9% | 0.9% | 4.4% |
| 5.00x | −14.3% | −8.7% | −4.0% | 0.3% | 4.2% |
| 5.50x | −18.0% | −11.0% | −5.3% | −0.4% | 4.0% |
| 6.00x | −24.1% | −14.2% | −7.0% | −1.3% | 3.7% |
Solvers
Highest entry multiple for a return of 20.0%
1.04x
The target return
Revenue growth a year for a return of 20.0%
13.5%
The target return
Debt capacity at closing, times EBITDA
5.69x
The interest cover or the limit of debt to EBITDA
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 | 48.9% | EBITDA over revenue, fiscal 2025 |
| Operations | Cash cost of leases, of revenue | 0.4% | Cash cost of leases over revenue, fiscal 2025 |
| Operations | Depreciation and amortisation, of revenue | 22.3% | Depreciation and amortisation over revenue, fiscal 2025 |
| Operations | Capital expenditure, of revenue | 33.4% | Median capital expenditure over revenue, fiscal 2024 to 2026 |
| Operations | Working capital, of revenue | 15.7% | 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 | 25.5% | 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 fiscal 2025, each with the documents it comes from.
| Input | Value | Method | Documents |
|---|---|---|---|
| Adjusted EBITDA | $19.2bn | Adjusted EBITDA of the company page | 10-K 2026-09, 10-K 2025-08 |
| Share-based pay | $972m | Share-based pay that adjusted EBITDA adds back | 10-K 2026-09 |
| EBITDA after share-based pay | $18.3bn | Adjusted EBITDA less share-based pay | 10-K 2026-09, 10-K 2025-08 |
| Depreciation and amortisation | $8.4bn | Depreciation and amortisation of adjusted EBITDA | 10-K 2026-09 |
| Revenue | $37.4bn | Revenue of the base period | 10-K 2025-08, 10-K 2026-09 |
| Operating lease cost | $153m | Operating lease cost | 10-K 2025-08 |
| Borrowings | $14.6bn | Total debt less lease liabilities | 10-K 2026-09, 10-K 2025-08, 10-Q 2025-11, 10-Q 2026-05 |
| Lease liabilities | $775m | Lease liabilities | 10-K 2025-08 |
| Cash and short-term investments | $10.3bn | Cash and short-term investments | 10-K 2025-08, 10-K 2026-09, 10-Q 2025-11, 10-Q 2026-05 |
| Non-controlling interests | $0 | The balance sheet reports none | n/a |
| Receivables | $7.2bn | Receivables | 10-K 2025-08, 10-K 2026-09, 10-Q 2025-11, 10-Q 2026-05 |
| Payables | $9.6bn | Payables | 10-K 2025-08, 10-K 2026-09, 10-Q 2025-11, 10-Q 2026-05 |
| Inventories | $8.4bn | Inventories | 10-K 2025-08, 10-K 2026-09, 10-Q 2025-11, 10-Q 2026-05 |
| Capital expenditure | $30.7bn | Capital expenditure of the latest fiscal year | 10-K 2026-09 |
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.