Overview

The Leveraged Buyout (LBO) Model provides a business
valuation of a target company for investment. The Leveraged Buyout (LBO) Model
forecasts future equity value and IRR while analyzing a target business for
acquisition using an LBO structure. Included in the template you will find: 

        
The Income Statement, Balance Sheet and Cash
Flow Statement

        
An Assumptions Section with key drivers for the
target company and a 3-scenario analysis

        
Supporting Schedules Section for PPE and Working
Capital

        
Credit Metrics section with a variety of
financial ratios regarding debt

        
Debt & Interest section highlighting the
different debt schedules and repayment

        
Levered and Unlevered Free Cash Flows using
Discounted Cash Flows method

        
IRR and Cash on Cash Multiple Sensitivity
Analysis using Entry/Exit multiples and Senior Debt over EBITDA

        
Charts and Graphs section highlighting Cash
Flow, Debt/EBITDA, Debt Service Coverage and Total Debt

First is the Assumptions sections where Assumptions are
entered in the cells for the projection periods along with the structure of the
deal. All assumptions can be modified to fit specific key drivers of the
business to see their impact on the Leveraged Buyout (LBO) Model. Up to 4 years
of historical data can be entered into the income statement, balance sheet, and
cash flow statement; the following projected years are driven by formulas from
the Assumptions section according to the selected scenario in cell G2. The
Supporting Schedules section consists of all formulas that are tied to the
Assumptions and 3 Statement sections so no editing is necessary. The Financing
section lists the various debt schedules for the target company along with Use
of Funds and the calculation for Goodwill to be used in the Closing Balance
Sheet. The next section is the Credit Metrics used to measure different debt
coverage markers. The Debt & Interest section lays out each debt schedule
and their terms of repayment. This also shows how much cash can be applied as discretionary
repayments to pay off debt early.

The Valuation & Returns section consists of levered and
unlevered cash flows based on the Discounted Cash Flow method. Here the
Terminal Value is calculated along with the Internal Rate of Return. In the
Sensitivity Analysis section, IRR and Cash on Cash Multiple is measured using
Entry/Exit multiples and Senior Debt over EBITDA. Lastly, Charts and Graphs are
used to display Cash Flow, Debt/EBITDA, Debt Service Coverage and Total Debt.

All cells in blue font are input cells where custom
information can be entered. All cells in black font are formulas set to
streamline the model. Sections are grouped to condense the model to view
sections individually.
 

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