In an LBO, what do the 'uses' in a sources/uses table refer to?

In the context of a leveraged buyout (LBO), the 'uses' in a sources/uses table refer specifically to how the capital raised in the transaction will be utilized. This typically encompasses several key categories essential for structuring the buyout. In a well-prepared sources/uses table, the uses specifically itemize the total purchase price of the target company, which includes the equity price paid to the sellers, the debt price associated with financing, and transaction fees that may arise during the acquisition process.

The inclusion of equity price accounts for the amount that investors will contribute in exchange for ownership, while the debt price details the financing that will be sourced through loans or bonds. Transaction fees include advisory and legal costs associated with the deal.

Other options present categories that do not comprehensively represent the primary uses of funds in an LBO context. For example, while equity and existing cash might seem relevant, they do not capture the complete picture of costs being incurred to finalize the acquisition. Understanding the sources/uses structure is crucial for analyzing how the LBO is financed and ensuring that all aspects of capital deployment are accounted for in the transaction.