In need of a sample of lbo model. Got a 'financial modelling' round of interviews next week. Don't know how to prepare for it. Coming from the consulting world, so, a bit worried. Would appreciate any industry-standard LBO model. My email is RUSLAN.DER (at) HOTMAIL (dot) COM. Thank you in advance! Ruslan
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http://www.wallstreetoasis.com/forums/full-blown-lbo-and-operating-model
sample lbo model IRR lever, best one? (Originally Posted: 01/19/2014)
In Figure 3.0, we see an IRR of approximately 14% to the private equity sponsor. This deal was done at a 3.0x Leverage Ratio and the company was acquired for a 25% premium, with an implied EBITDA purchase multiple of 7.4x. While a 14% IRR is not bad, typically private equity firms aim for higher returns than this. Based on these numbers and the calculations shown above, what do you think is the most REALISTIC way to boost the IRR to the sponsor in this model? a. Reduce the purchase premium so that the PE firm pays a lower purchase EBITDA multiple and therefore earns a higher return since it invests less equity in the beginning. b. Increase the exit EBITDA multiple – for a company of this size growing at this rate, it’s reasonable to assume a moderate level of multiple expansion by Year 5. c. Do a dividend recap in Year 3 or Year 4 – all else being equal, more leverage should always boost the IRR if the IRR is positive to begin with. d. Use more leverage initially, since a 3.0x Leverage Ratio is not very aggressive and the company can most likely support more debt
A - this is a lever you can actually pull that also reduces your exposure.
http://macabacus.com/
LBO sample models (Originally Posted: 02/24/2010)
I am trying to learn how to build accretion/dilution and advanced lbo models, would you be so kind share with me what you have, that would be tremendously helpful for me to prepare for my job. Thank you very much and I really really appreciate your help.
[quote=mathewp984]http://macabacus.com/[/quote]
definitely agree, a great website and a hidden gem... that walks you through a good lbo model... this is also a good one, along the same lines but should give you an idea at the different ways to approach an LBO model, both correct IMHO...
www.exinfm.com/excel%20files/LBO%20Model%20Template.xls
Also, try this as a good tutorial, which you can also download on the site:
http://www.macabacus.com/lbo-model/introduction
thank you very much guys anyone else
Increase leverage baby, anything less than 7x is for suckers
d) you might not realistically be able to buy the company for less agg purchase price but 3.0x leverage is low. you'll probably be able to lever up to 4.5x-5.0x which will definitely increase the IRR
This is PERFECT! Thank you both so much! Ruslan
+1
Generally agree with D but I also think most people can also agree that it depends on the company's ability to service higher leverage... In case you have info about the firm, estimate their debt service capacity. If they can take on higher leverage go with D, if they can't you're overpaying (A).
Thanks for sharing the great website: www.macabacus.com
Sorry, why are you people doing this guys homework for him?
*going forward i should disclose that it's now CFA revision time and i hate life / will procrastinate more on WSO.
thanks. oreos - not homework just came across this test online and it bothered me not to know the answer.
Starting 30 threads asking questions with multiple choice options is hardly just you inquiring.
Is this from the test that HSP is making banking analysts take?
Its called interview prep.
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