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Advanced LBO Modelling

Learn how to master the key elements of Modelling in an LBO Analysis

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A two-day LBO modelling course presented in a virtual class or face-to-face in London from 09:30 to 17:00 UK Time

Day One

The first part of this LBO Modelling course is split into five sessions

Session 1 – Short Form LBO Model

  • Forecasting the unlevered free cash flow from operating data
  • Deal Terms: Offer Price and Enterprise Value; Sources & Uses of Funds
  • Allocating cash flows to repay debt using a simple cash sweep
  • Linking up the interest expense
  • Exit returns and sensitivity analysis of equity returns vs. entry multiple, leverage and exit multiple
  • Exercise – complete a Short Form LBO model

Session 2 - Leveraged Buyout Model – Equity Value Creation

  • Analyse the components for equity value creation
  • Decomposing value creation into revenue growth, EBITDA margin improvements, debt repayment, multiple expansion, deal fees
  • Build a bridge chart to show absolute amounts of value creation and Multiples of Invested Capital
  • Exercise: Building a Value Creation Bridge both absolute and Money Multiple based

Session 3 - Completion Mechanisms and Deal Adjustments

  • Contrasting Locked-Box vs. Completion Account Mechanisms
  • Reconciling Enterprise Value to Actual Equity Purchase Price
  • ‘Normal’ OWC
  • Book Value vs. Fair Value adjustments
  • Under/(over) spend on Capex
  • Debt-like liabilities
  • Locked-box roll forward
  • Exercise: Estimate the Equity Purchase Price after deal adjustments for Completion Accounts and Locked-Box deals.

Session 4 – LBO Debt Financing and Debt Capacity

  • Debt capacity analysis
  • Determining a maximum debt capacity using unlevered free cash flows
  • Amortising Senior Loan
  • Bullet subordinated tranches
  • Mezzanine
  • Exercise: Determine the level of debt the company could obtain

Session 5 – Modelling a Debt Waterfall

  • Estimating unlevered free cash flow
  • Cash flow available for debt service vs. Cash Flow available for debt repayments
  • Mandatory Repayments: straight-line amortisation, balloon and bullet repayments
  • Issuance/repayment of revolver
  • Cash available after mandatory repayments and revolver
  • Covenant-based constraints on cash distributions to equity investors
  • Accelerated/ discretionary repayments
  • The final exercise for day one of this LBO modelling course: Build a full debt waterfall model, with mandatory repayments, revolving credit facility, discretionary repayments and equity distributions

Day Two

The second part of this LBO Modelling course is split into a further five sessions

Session 6 – Building a Long Form Model – LBO Case Study

  • Deal Assumptions: Equity Offer Value and Enterprise Value
  • Sources and Uses of funds with senior, subordinated, mezzanine, shareholder loan and sweet equity
  • Calculating deal Goodwill and building a consolidated balance sheet
  • Integrating an Operating Model with NewCo Finance Structure
  • Create a debt waterfall with mandatory repayments, revolving credit facility, and covenant-based cash sweep
  • Current and deferred taxation, given limitations on the tax deductibility of debt
  • Determine the key ratios
  • Exit enterprise value and bridge to equity value
  • Value creation schedule with a value creation bridge
  • Internal rates of return for all investors
  • Sensitivity analysis

Session 7 – LBO Management Incentive Structure

  • Ratchet Share Mechanisms vs. Sweet Equity
  • Calculation of risk and rewards: IRR and Money Multiples
  • Exercise: Contrasting RSM vs Sweet Equity with varying IRRs.

Session 8 – Leveraged Recapitalisations – Case Study

  • Benefits of a leveraged recapitalisation
  • Recapitalised Source and the use of an LBO funds schedule
  • Assumptions – interest and new debt capacity
  • Integrating the new debt funding within a waterfall
  • Integrating the new interest rates post-recapitalisation
  • Exit values and IRR, with and without the recap
  • Value creation schedule with a value creation bridge
  • Exercise: Incorporating a Leveraged Recap within an existing LBO Model

Session 9 – Buy-and-Build LBO Modelling

  • Integrating a bolt-on acquisition within an existing platform business model
  • Bolt-on Enterprise Value and Equity Value
  • Bolt-on sources & uses of funds
  • Flexing the completion date and pro-rating bolt-on cash flows
  • Integrating Bolt-on Income statement and cash flow within a short-form platform model
  • Analysing exit returns and value creation from the bolt-on
  • Exercise: Incorporating a Bolt-on Acquisition within an existing LBO Model

Session 10 – Structure of PE Funds: GP vs. LP Returns

  • The life cycle of a PE fund: Investment, Development & Harvesting Phases
  • Measuring Fund Performance: % PI, DPI, RVPI, IRR vs. TVPI
  • Fund vs. GP vs. LP returns: carried interest & catch-ups
  • American vs. European Funds
  • Exercises: Calculating Performance Ratios, IRRs and Multiples for Funds and GPs

After graduating from Cambridge University in 1993, our LBO model course expert worked as an auditor with Arthur Andersen. This allowed him to gain 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 London, he worked in a front office role where he advised companies on valuation, financing, acquisitions, foreign exchange and derivatives. This breadth of practical experience and his passion for sharing and communicating knowledge naturally led him towards a career in LBO financial modelling training.

He has worked in financial training for the last ten years and delivered training courses on a wide variety of topics, which includes delivering leveraged buyout training. His expertise is in accounting, financial modelling, corporate finance, valuation and capital markets at investment banks, private equity and corporate finance firms worldwide.

By the end of this LBO modelling course, participants will be able to:
  • Build an LBO model that incorporates complex debt structures
  • Model the impact of the new LBO financing structure and key issues around structuring
  • Estimate debt capacity
  • Identify potential adjustments in determining an appropriate equity purchase price based on a business enterprise value
  • This LBO model course will ensure you complete a fully integrated LBO model with:
    • Deal Terms
    • Source and use of LBO funds
    • Integrated financial statements
    • Detailed debt waterfall, allocating cash flows across a debt structure with potential for dividend distributions
    • Equity value bridge charts illustrating components of value creation
    • Sensitivity analysis

  • Our LBO model course is presented by a qualified Chartered Accountant with practical investment banking experience.
  • Upon completion of this advanced LBO model training, a series of LBO models and Excel exercises will have been completed and provided.
  • A summary workbook that covers all areas of this LBO model training for easy reference will be provided for you after the course has been completed.
  • This Advanced LBO modelling course will be hands-on. Using Excel, our trainer will show you how LBO models are built and developed in practice to varying degrees of complexity.

Our advanced leveraged buyout training is a ‘must know’ for:
  • Corporate Finance professionals at all levels; especially those focused on private equity transactions.
  • Private equity LBO professionals who manage or oversee the execution of their firm’s deals.
  • Finance professionals within portfolio companies who want a closer understanding of the private equity LBO process, and how their companies fit within the context of a PE fund.

Our leveraged buyout course will begin with a fast method of reviewing an LBO opportunity. We do this so you can gain the key concepts before embarking on the advanced modelling issues of LBOs.

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

Finally, our leveraged buyout training will focus on building a debt waterfall and developing an advanced LBO model from scratch with NewCo/OpCo consolidation and integrated consolidated LBO financial model forecasts. 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.
  • The trainer was fantastic!

Number of places:

£ 2380.00

Discounts available:
Face-to-face in London

  • 2 places at 20% less
  • 3 places at 25% less
  • 4 places at 30% less
  • 5 places at 35% less
  • 6+ places at 40% less
  • Select the number of course places and dates to automatically calculate the discount
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