In front of you is our Paper LBO Model.
Please take a look
Start learning the craft of Leveraged Buyout (LBO) with u
With this model, we help you develop a deep understandi
structured and easy-to-follow framework.
Our Paper LBO model provides an invaluable tool for honi
Basic information on our Paper LBO Model:
1) You are acquiring a company through LBO. Prior to acq
Free Cash Flow company will generate
2) You plan to sell a company after 5 years
3) All Free Cash Flow Company generates during 5 year p
value.
Abbreviations used in model:
1) LTM - last 12 months
2) EBITDA - Earnings before interest, tax, depreciation an
3) 5y - 5 years
4) D&A - Depreciation and amortization
5) CAPEX - Capital expenditures
6) NWC - Net working capital
7) EBIT - Earnings before interest and tax
8) EBT - Earnings before tax
9) CIT - Corporate Income Tax
Please take a look at sheet LBO model. Fill-in only blue cells and then you will get results in white
yout (LBO) with us. Especially designed for individuals aiming to excel in private equity and invest
deep understanding of key LBO concepts, financial analysis, and decision-making processes throug
k.
uable tool for honing your expertise and securing your dream role in the finance industry.
del:
LBO. Prior to acquisition, company was debt-free. Debt you issued to finance the acquisition will b
ars
es during 5 year period will be used for repayment of debt. Excess cash after paying debt will incre
x, depreciation and amortization
ax
t results in white cells.
equity and investment firms.
g processes through our
ndustry.
acquisition will be repaid by
ng debt will increase Equity
ENTER ASSUMPTIONS FOR PAPER LBO MODEL
Target company's LTM sales ($) ###
Target company's LTM EBITDA margin 30%
Entry EBITDA multiple 4
Annual Sales growth - 5y projection 10%
EBITDA margin - 5y projection 30%
Corporate income tax rate - 5y projection 10%
Exit EBITDA multiple - exit after 5y 4
% of debt used for acquisition 15%
D&A as % of sales - 5y projection 10%
CAPEX as % of sales - 5y projection 10%
NWC investments as % of sales - 5y projection 10%
Interest rate - 5y projection 10%
Entry Value
LTM EBITDA ($) ###
Entry Enterprise Value ($) ###
Entry Debt Balance Value ($) ###
Entry Equity Value ($) ###
Income Statement
Profit and Loss Account ($) 0
Sales ###
EBITDA 3,000,000
D&A /
EBIT /
Interest expenses 0
EBT /
CIT /
Net Income /
Cash Flow Statement
Cash Flow Statement ($) 0
EBITDA 3,000,000
Interest expenses 0
CIT /
CAPEX /
NWC /
Free Cash Flow /
Cumulative Free Cash Flow /
Exit Value
EBITDA - year 5 ($) ###
Exit Enterprise Value ($) ###
Exit Debt Balance Value ($) ###
Cumulative Free Cash Flow ($) ###
Exit Equity Value ($) ###
Rate of Return
MOIC - Multiple on Invested Capital (Equity) 2.17
IRR - Internal Rate of Return 16.71%
The Rule of 72 IRR - applicable only if your MOIC is close to 2!!! 14.40%
The Rule of 114 IRR - applicable only if your MOIC is close to 3!!! 22.80%
The Rule of 144 IRR - applicable only if your MOIC is close to 4!!! 28.80%
1 2 3 4 5
### ### ### ### ###
3,300,000 3,630,000 3,993,000 4,392,300 4,831,530
1,100,000 1,210,000 1,331,000 1,464,100 1,610,510
2,200,000 2,420,000 2,662,000 2,928,200 3,221,020
180,000 180,000 180,000 180,000 180,000
2,020,000 2,240,000 2,482,000 2,748,200 3,041,020
202,000 224,000 248,200 274,820 304,102
### ### ### ### ###
1 2 3 4 5
3,300,000 3,630,000 3,993,000 4,392,300 4,831,530
180,000 180,000 180,000 180,000 180,000
202,000 224,000 248,200 274,820 304,102
1,100,000 1,210,000 1,331,000 1,464,100 1,610,510
1,100,000 1,210,000 1,331,000 1,464,100 1,610,510
718,000 806,000 902,800 1,009,280 1,126,408
718,000 ### ### ### ###
