20.11.2023
Sophisticated LBO model was indeed very massive, it's great that we walked through it consequentially and in detail.
LBO Modeling in Excel
with
Ned Krastev
A comprehensive hands-on guide to leveraged buyout valuation. Learn how to create an LBO model in Excel from scratch.
4 hours 50 lessons
Start course
50 High Quality Lessons
2 Practical Tasks
4 Hours of Content
Certificate of Achievement
Course Overview
Do you want to learn the ins and outs of an exciting acquisition strategy? Are you looking for an opportunity to improve your financial modeling skills? This LBO Modeling in Excel course is the perfect fit for you. It combines leveraged buyout theory with two hands-on case studies that bridge LBO theory and the practical application needed when working in a real-world environment. Understanding the mechanics and details behind a leveraged buyout deal can be rewarding for every finance professional. These are complex transactions involving different financial instruments, covenants, and structures. Therefore, this LBO Modeling in Excel course is an excellent choice for professional development and continuous learning. The two extensive LBO case studies you’ll partake in have different difficulty levels. The first one represents the so-called ‘paper LBO’—a simple one-page financial model that’s easy to understand and suitable for beginners. (A frequently asked task in investment banking interviews is creating a paper LBO financial model). The second model we’ll create (step-by-step) together is significantly more complicated. It involves calculating transaction fees and goodwill, creating a fixed asset roll forward, P&L, Balance sheet, cash flow, equity, and debt schedule. This involves a greater level of detail than the paper LBO model. This task will help you improve your financial modeling skills by working on a sophisticated multi-layered LBO valuation. This LBO modeling course is highly recommended if you wish to pursue a career in investment banking or investment analysis. It teaches you concepts and skills that are frequently asked about during the recruitment process.
Topics covered
ExcelLBOValuation
What You'll Learn
In this LBO Modeling in Excel course, theory and practice go hand in hand. We introduce the fundamental approach behind leveraged buyouts (LBOs) and work on practical case studies that will reinforce theoretical concepts and teach you how to create an LBO model in an authentic work environment.
Know how an LBO works
Understand debt capacity and calculate a firm’s maximum debt capacity
Determine an LBO price and possible LBO exit strategies
Build a paper LBO model
Create a complete LBO model with a fixed asset rollforward, debt and equity schedule, and revolver loan modeling
Obtain a sensitivity table that shows sponsors’ IRR in different scenarios
Curriculum
- LBO fundamentals7 Lessons 29 Min
In the first section of this LBO modeling course, you’ll learn about leveraged buyouts, how an LBO works, who the lenders are, how to measure a firm’s debt capacity, when an LBO is a feasible option, how to determine the fair price investors would be willing to offer to execute an LBO transaction, and exit strategies LBO investors could pursue.
What is an LBO? FreeHow an LBO works in practice FreeWho are the lenders in an LBO FreeWhat is debt capacity and how to define the maximum debt capacity in an LBO deal?When is an LBO a feasible option?How to determine the maximum LBO priceThe different types of LBO strategies that can be pursued by financial sponsors - The Dell LBO: A real-life LBO case study4 Lessons 13 Min
In 2013, Michael Dell partnered with investment firm Silver Lake in a deal aiming to delist Dell from public markets. This is the company he had started 29 years earlier. At the time, analysts believed Dell wasn’t positioned well from a strategic perspective because they were too reliant on PC sales, a segment that was slowing down due to the introduction of devices such as tablets and smartphones, which caused shifting consumer behaviour. Mr Dell, on the other hand, saw things differently. He believed the company was uniquely positioned, as a process of transition that started in 2008 was now running its course. In short, this is the context, which led to the Dell LBO.
Dell case study - Intro to the dealDell case study - Dell's business from a strategic perspectiveDell case study - Parameters and specifics of the dealDell case study - The aftermath - Build a paper LBO model in Excel9 Lessons 34 Min
This section teaches you how to create your first LBO model: a paper LBO. This simple, intuitive exercise allows you to reinforce the theory learned in the first part of the course.
Intro to the Paper LBO exerciseWorking on debt capacity of the dealObtaining equity needed for the LBO dealFilling in P&L projectionsWorking on Debt schedule and P&L completionCalculating Cash FlowCompleting financial projectionsObtaining Equity at exit and IRRSensitivity analysis - Comprehensive LBO modeling case study30 Lessons 118 Min
This exercise will provide valuable insights into the intricacies of an LBO transaction and its associated financial modeling. This is a comprehensive modeling exercise that teaches you how to model the financing of an LBO transaction, the revolver statement, and how to calculate the rate of return of financial sponsors.
Case descriptionIntroduction to LBO Modeling exerciseKey drivers in the LBO modelConstructing the Profit and Loss headerAnalyzing historical Profit and Loss figuresValuing the Target companyEstimating transaction feesSources and uses of fundsShaping the Balance sheet at transactionGoodwill calculationIntegrating assumptions into the Drivers sheetBuilding a Fixed asset roll forward scheduleForecasting financials using the Drivers sheetCompleting the Profit and Loss statement (up to EBITDA)Modeling Working capitalFilling in the Balance sheet at transaction sheetAdd financials to the Balance sheetProjecting Fixed asset roll forwardDeveloping a Debt scheduleCreating a Fixed asset amortization scheduleStructuring Cash FlowDesigning the Financing sheetCalculating Cash FlowBuilding an Equity scheduleFinalizing the Financing Cash FlowModeling the Revolver facility (first part)Completing the Profit and Loss statementModeling the Revolver facility (second part)Balancing the Balance sheetExit valuation and IRR comparison
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“Questions related to LBO theory and modeling are some of the most frequently asked in investment banking and investment analyst interviews. This course will help you prepare for these challenges so that you can be at ease during your interviews and first days on the job.”
Ned Krastev
CEO at 365 Data Science
LBO Modeling in Excel
with Ned Krastev