Overview
A modifiable private equity returns template with an isolated and built out section to highlight the returns to a private equity investor looking to acquire a target firm. This excel template model can be fully adjusted to suit your financial analysis needs. All historical numbers and forecast assumptions can be replaced to analyze any leveraged buyout transaction. An LBO transaction is an acquisition transaction where the acquirer borrows a substantial amount of money to purchase another company. By committing as little of their own capital as possible, private equity firms aim to achieve a high return from this transaction. However, while this is a method to increase equity returns, the high degree of financial leverage associated with an LBO greatly increases the risk of the transaction. It is important to be able to properly evaluate the return that a private equity firm will achieve with an LBO transaction. This private equity returns template is perfect for discerning the returns acquired as a result of a complex LBO transaction. This private equity returns template includes:
  • DCF analysis returning NPV and IRR
  • Levered IRR analysis by investor type
  • Sensitivity analysis
Supplemental materials included in this private equity returns template are:
  • 3 statement and operating model
  • operating scenarios
  • transaction assumptions
  • Debt and interest schedule
This private equity returns template can also assess the effects on the valuation of an LBO transaction based on the debt structure of the LBO. Use the debt schedule to input different terms, fees, and interests rates for different tranches of debt. The debt structure for an LBO may include any of 3 types of debt:
  1. Bank debt – the least expensive form of financing instrument with lower interest rates. Unfortunately, banks have many lending restrictions which may restrict a firm.
  2. High Yield Debt/Subordinated Debt – usually unsecured debt, which carries higher interest rates than bank debt. During liquidation, bank debt is also paid off before high yield debt.
  3. Mezzanine Debt – often funded by hedge funds and private equity investors, with a higher interest rate than the other forms of debt.
You can also learn how to construct an LBO financial model step-by-step with CFI's Leveraged Buyout Modeling Course!  
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