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Courses > Deal Structuring > Leveraged Buyout Analysis > Leveraged Buyout (LBO) Modeling

Leveraged Buyout (LBO) Modeling1 dayClassroom
Intermediate


How much can a buyer pay? Participants will build financial models that analyze leveraged buyout (LBO) transactions as they are developed in today’s market. You’ll learn to handle tricky circularities inherent in structures like revolvers and cash sweeps along with modeling the return to different players in an LBO deal.

Modelling and Structuring

  • Overview of leveraged financing, including how to structure a leveraged buyout
  • Understanding how value is created in an LBO
  • Overview of market expectations for debt and equity returns
  • Planning a model
  • Building a forecast of operating and investing line items in the financial statements
  • Modelling and interpreting a financial structure

Typical LBO Financial Instruments

  • Revolving Credit Facility
  • Term Loans A, B, C
  • Senior Notes
  • PIK instruments
  • Preferred Equity
  • Equity
  • Building cost assumptions for the different financial instruments
  • Building a sources and uses of funds
  • Integrating the financial line items with the operating and investing line items

Building a Fully Integrated LBO Model

  • Building a cash flow statement for the LBO model
  • Determining the debt capacity from the cash flow forecast
  • Understand how to build a cash sweep into the model
  • Building a cash sweep accelerator into an existing debt repayment schedule
  • Calculating and interpreting credit metrics to determine if the debt is reasonable
  • Fixing the debt capacity
  • Building and interpreting an IRR calculation, including dealing with warrants
  • Flexing the premium paid and the ownership structure to flex the equity and mezzanine returns
  • Determining the most a financial buyer can pay in an LBO

Checking

  • How to integrity check a LBO model

LBO Modelling Extras

  • Building a cash-sweep debt repayment into the cash flow statement
  • Building a cash sweep accelerator into an existing debt repayment schedule
  • Dealing with cash-sweep related circular references
  • Modelling mezzanine financing and the return to mezzanine holders
  • Modelling the Internal Rate of Return (IRR) for different equity contributions and warrants

You can call Matchett on +44 (0)1295 256161 to book a course or simply discuss your training needs OR email us:

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Related Courses

  • None
Model typical LBO structures like PIK instruments and cash sweeps

Pre-requisites

Basic accounting and Excel modeling skills

Delegate Profile

Anyone who deals with LBO transactions as buyer, seller or financial participant