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Advanced LBO Modelling

Master the Key Elements of Modelling in an LBO Analysis

Advanced LBO Modelling Training Course

A two-day course

  • The course will be presented by a qualified Chartered Accountant, with practical investment banking experience.
  • The course will be hands-on, excel-based, showing how LBO may be built and developed in practice to varying degrees of complexity
  • Participants will provided with a summary workbook covering all areas of the course for easy reference after the course.
  • At the close of the workshop, a series of LBO models will have been completed and provided.

By the end of this course, participants will be able to:
  • Build an LBO model incorporating complex debt structures
  • Model the impact of the new financing structure and key issues around structuring
  • Understand the key structuring issues and debt capacity
  • Complete a fully integrated LBO model with:
    • Analysis of the acquisition
    • Source and use of funds
    • Three statements
    • Cash sweep for the debt structure
    • Return analysis
    • Sensitivity analysis

Day One

Session 1 – Short Form LBO Model

  • Purchase price
  • Debt analysis and fees
  • Debt Schedule – cash sweep repayments
  • Source and use of funds
  • Income Statement and Cash Flow Statement
  • FCF – debt repayment
  • Exit
  • Return and sensitivity
  • Exercise – complete a Short Form LBO model

Session 2 - Leveraged Buyouts – The Key Issues

  • The drivers of leveraged finance
  • Key corporate debt structuring principles
  • Estimating the debt capacity: multiples vs. cashflow available for debt service
  • Debt capacity multiples in practice and credit analysis
  • Refinancing risk
  • Exercise: Review the deal and establish the maximum debt levels

Session 3 - Equity Financing

  • Types of equity
  • Management versus private equity
  • Ratchet mechanisms and “Sweet” equity
  • Calculation of risk and return
  • Internal rates of return (IRR)
  • Exercise: Establish the level of equity the private equity investor will require versus the management team, with a ratchet mechanism.

Session 4 – LBO – Debt Financing and Debt Capacity

  • Senior debt – different tranches
  • Debt capacity analysis
  • Structuring and pricing the deal
  • Transaction costs
  • Cash sweep across debt instruments
  • Structure the relationship between the players
  • Exercise: Determine the level of debt the company could obtain.

Session 5 – Modeling a Debt Waterfall

  • Cash Flow available for Debt Service
  • Interest income/ (expense)
  • Cash Flow available for Debt repayments
  • Mandatory Repayments: amortising, balloon and bullet
  • Issuance/ (repayment) of revolver
  • Cash available after mandatory repayments and revolver
  • Covenant constraints on cash distributions to equity investors
  • Accelerated repayments

Session 6 - Mezzanine Financing

  • Mezzanine (with/without warrants)
  • PIK (Payment in-kind)
  • Shareholder loans and preference shares
  • Pricing, defaults, and covenants
  • Analysis of suitability and risks
  • Exercise: complete the cash sweep section of the model.

Day Two

Session 7 – Building the Model – Case Study

  • Deal price and deal goodwill
  • Source and use of funds schedule
  • Assumptions – three statement model (including an operating model) and cash available for debt servicing
  • Establishing senior debt level
  • Determine the equity split – management and private equity
  • Structure of the mezzanine finance
  • Create a debt cash sweep and mandatory debt repayments (revolving credit facility)
  • Calculate and adjust any debt issuance fees
  • Determine any taxation issues
  • Determine the key ratios
  • Exit strategy and exit values
  • Value creation schedule with a value creation bridge
  • Internal rates of return for all investors
  • Sensitivity analysis
  • Presentation

Session 8 – Leveraged Recapitalisations– Case Study

  • Benefits of a leveraged recapitalisation
  • Recapitalised Source and use of funds schedule
  • Assumptions – interest and new debt capacity
  • Integrating the new debt funding within a waterfall
  • Integrating the new interest rates post-recapitalisation
  • Create a debt cash sweep and mandatory debt repayments (revolving credit facility)
  • Calculate and adjust any debt issuance fees
  • Determine the key ratios
  • Exit values, with/ without the recap
  • Value creation schedule with a value creation bridge
  • Internal rates of return for all investors
  • Sensitivity analysis
  • Presentation

Session 9– Summary and Close

After graduating from Cambridge University in 1993, the trainer worked as an auditor with Arthur Andersen, gaining a comprehensive knowledge of corporate accounting and financial statements. He qualified as a chartered accountant (ACA) and then worked in investment banking in the City of London, initially with HSBC and subsequently at Merrill Lynch. Throughout his time in the City he was in a front office role, advising companies on valuation, financing, acquisitions, foreign exchange and derivatives. This breadth of practical experience together with his passion for sharing and communicating knowledge, naturally then led him towards a career in financial training.

He has worked in financial training for the last ten years and delivered training courses on accounting, financial modelling, corporate finance, valuation and capital markets at investment banks, private equity and corporate finance firms throughout the world.

The course will begin with a fast method of reviewing an LBO opportunity, which is used to gain the key concepts before embarking onto the advanced modelling issues for LBO’s

The financing structures and debt capacity will be explored, looking at equity finance, pure debt finance, and mezzanine finance

The course will focus on building a debt waterfall and developing an advanced LBO model from scratch with NewCo/ OpCo consolidation and integrated consolidated financial forecasts. Finally, we will also look at modelling a leveraged recapitalisation and the benefits obtained from undertaking this.

  • The trainer was extremely well versed on the subject matter and was able to answer all our queries practically via Excel examples, which is fantastic for those looking to master the modelling aspect of LBOs
  • Good interaction with the teacher, very user friendly and organized models.
  • The trainer was brilliant in the delivery of the course. The content was completely relevant and the "hand-outs" were spot on.
  • Fantastic tutor, who provided a great walkthrough of complex modelling and learn new excel skills.

Number of places:


Per participant
Discounts available for multiple place booking find out more

Have this course presented In-House

  • On a date, time and in a location of your choice
  • Topics expanded or deleted to your bespoke requirements

Have this course pre-recorded

  • Full course recording edited exclusively for your company
  • Files converted to enable housing on your LMS

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