How does a debt funded deal work?

How does a debt funded deal work?

For purely demonstration purposes, this is a very simplistic example but it will illustrate the point, as follows:

• Purchase price £1m, based on a 4x multiple of ebitda of £250,000

Structure of the deal:

A completion payment of 60% ie £600,000

The balance of £400,000 deferred* over 4 years in equal instalments

• Costs of the deal** say £120,000
• Funds required to complete the purchase:

Completion payment £600,000 plus costs of the deal equate to a total of £720,000.

Less the capital injected by the buyer £100,000.

Balance = £620,000 requ