easy · Private Equity advanced-lbo
In a 'Cash Sweep' mechanic, why is the 'Minimum Cash' balance subtracted from the available cash before determining the final sweep amount?
- To ensure the sponsor's GP entity receives its promote catch-up distribution before any debt is repaid.
- Because Minimum Cash is formally treated as a 'Debt-like item' within the Enterprise Value bridge calc.
- To satisfy the Inter-Creditor Agreement's requirements regarding the seniority ranking of senior secured debt.
- To provide the portfolio company with an operational liquidity cushion for day-to-day working capital needs.
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