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Advanced LBO Modelling - ASPAC

Build and complete a fully integrated LBO model incorporating complex debt structure

Majestic close-up of cityscape with a towering skyscraper in the foreground

A two-day course

Day One

Session 1 – Introduction and Basic LBO Model

  • The drivers of leveraged finance
  • Source and use of funds
  • Key corporate debt structuring principles
  • Estimating the debt capacity: multiples vs. cashflow available for debt service
  • Income Statement and Cash Flow Statement
  • FCF – debt repayment
  • Exit
  • Return and sensitivity
  • Exercise – complete a Basic LBO model

Session 2 – Intermediate LBO Model

Session 2a - Equity Financing

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

Session 2b - 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
  • Model: Determine the level of debt the company could obtain

Session 2c - Modelling 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 2d - Mezzanine Financing

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

Day Two

Session 3 – Advanced LBO Model

  • Deal price and deal goodwill/step-up
  • 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 detailed 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

Session 4 – 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 (RCF)
  • 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 5 – HoldCo-OpCo – Case Study

  • Structural subordination
  • Capital structure at OpCo: bank debt and high yield
  • Capital structure at HoldCo: mezzanine and shareholder loan
  • Cash flows between the structures: dividends/investment income

Redcliffe’s advanced LBO modelling course trainer has 20 years of experience in accounting and investment banking at leading firms and is an experienced financial trainer who has delivered courses for financial institutions in the City of London and around the world, in the areas of Corporate Finance, Equity Valuation, Financial Modelling, M&A, LBO, Financial Accounting, Capital Markets, Bank Regulatory Capital, Financial Risks, both in English and French.

By the end of this advanced LBO modelling 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

  • Practical advanced LBO modelling course by experienced trainer, an M&A banker with years of structuring and modeling experience in Europe
  • Redcliffe’s leveraged buyout training 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

This advanced LBO modelling course provides a comprehensive analysis of LBO modelling, including the main debt and equity products, a detailed cash sweep, equity return analysis, leverage recapitalisation and HoldCo-OpCo structuring.

  • 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.


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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