5. Leveraged Buyout Analysis


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