5. Leveraged Buyout Analysis

Overview

Video Hours: 5 | Mentoring Session: 1

A Leveraged Buyout is a fundamental, yet complex acquisition model commonly used in the Private Equity industry. We will look at the fundamental concepts, benefits, and drawbacks of a Leveraged Buyout. We will understand how to effectively analyze a Leveraged Buyout by building a fully consolidated LBO model. We will further analyze the fundamental impact of such a transaction and calculate the expected return to investors. Lastly, we will spend time interpreting the variables and wide array of financing structures to understand how to maximize IRR.

Topics Covered

• What makes a good LBO candidate
• Operation improvements, multiple expansion, de-leveraging
• Sources & Uses Capital
• Sponsors equity and internal rate of return (IRR)
• Debt Pay Down vs. Operational Growth
• Sources of Capital (Term Loans, Mezzanine Debt, PIK Securities)
• Goodwill assumptions Purchase Price Consideration Pro-Forma
• Financial Statements Balance Sheet Adjustments Depreciation and Deferred Taxes Working Capital and Debt Schedule Outputs, Sensitivities, and Scenarios