What does the 'uses' section in an LBO financing structure primarily cover?

In a leveraged buyout (LBO) financing structure, the 'uses' section is pivotal as it details the allocation of funds raised to finance the transaction. This section primarily covers purchase and refinancing activities, emphasizing how the capital will be utilized to acquire the target company and pay off any existing debt associated with that business.

When a private equity firm initiates an LBO, the 'uses' section will outline the total purchase price for the target company, including any transaction costs such as advisory and legal fees. It will also reflect funds allocated for refinancing existing debt, which is crucial for the financial restructuring that often occurs post-acquisition. This use of funds provides insights into the financial strategy of the acquisition and helps stakeholders understand how the transaction will impact the capital structure of the newly acquired entity.

By clearly presenting these financial needs, the 'uses' section serves a critical role in the overall analysis and planning of the LBO, ensuring all stakeholders are aligned on the purpose of the financing.