If deemed necessary, reported comments will be removed within 7 - 10 days but usually sooner. Please submit this report ONLY if you STRONGLY believe this needs to be removed. Multiple illegitimate reports slow down the administrative process of removing the actual and more seriously unfavorable content.

Poster Name:
Phi delta theta capital

<strong>Subject:</strong><br />PDT LBO of THETA CHI<br /><br /> Poster Message:
Deal Overview • Buyer: Phi Delta Theta • Target: Theta Chi’s house • Transaction Type: Leveraged Buyout (LBO) • Rationale: Strategic acquisition to expand Phi Delta Theta’s presence, control prime real estate, and potentially grow membership. 1. Purchase Price Assumptions • Theta Chi’s House Estimated Value: $2.5 million (assumed for now, but actual appraisal is needed) • Acquisition Price: $2.3 million (negotiated below market value) • Closing Costs & Renovation Budget: $200,000 • Total Funding Required: $2.5 million 2. Financing Structure An LBO relies on a mix of debt and equity to finance the deal. Here’s how it could be structured: Debt Financing (75% of Total Capital) - $1.875 million • Bank Loan: $1.25 million (senior secured loan at 7% interest, 10-year term) • Seller Financing: $500,000 (Theta Chi carries a note at 5%, balloon payment in 5 years) • Private Loan from Alumni Fund: $125,000 (5-year loan, 6% interest) Equity Financing (25% of Total Capital) - $625,000 • Phi Delta Theta Housing Corporation Contribution: $300,000 • Capital Raised from Alumni: $250,000 • Undergraduate Chapter Fundraising: $75,000 3. Cash Flow & Debt Paydown Strategy • Revenue: • Room & Board from members: $250,000/year • Social event rentals or leasing extra space: $50,000/year • Total Revenue: $300,000/year • Expenses: • Mortgage Payments: $190,000/year • Property Taxes & Maintenance: $50,000/year • Utilities & Insurance: $30,000/year • Total Expenses: $270,000/year • Net Operating Cash Flow: $30,000/year (used to pay down debt faster) • Exit Strategy: • After 5 years, refinance the debt using property appreciation (house value likely grows to $3 million+) • Theta Chi’s balloon payment is paid off using refinanced mortgage • Long-term goal: Full ownership with no debt burden by year 10 4. Key Risks & Mitigations • Risk: Low occupancy or declining membership → Mitigation: Strong recruiting & alumni backing • Risk: Interest rates rise → Mitigation: Lock in fixed-rate loans where possible • Risk: Theta Chi fights the deal → Mitigation: Negotiate an off-market sale before others bid