Lbo stuvia 2023 Study guides, Class notes & Summaries

Walk me through a basic LBO model. - ANSWER Step 1: Determine the purchase price by focusing on precedent transactions since you are buying the company and need to include the premium paid in other transactions. Step 2: How will the deal be financed. Source of funds includes the capital required to complete the transaction. Step 3: Create a pro forma balance sheet by adjusting the existing balance sheet of the company to reflect the LBO transaction, including the new capital structure. ...

What is an LBO? - ANSWER Acquisition of another company using significant amount of debt. 90% debt - 10% equity Walk me through an LBO model - ANSWER 1. Make assumptions about purchase price, debt/equity ratio, and interest rate on debt 2. Create a sources/uses section, which shows how the transaction is financed and how much investor equity is required 3. Adjust balance sheet for new debt/equity figures 4. Project out company's financial performance and determine how much debt woul...

Walk me through a basic LBO model? - ANSWER 1) Assumptions of purchase price, debt/equity ratio, interest rate on debt, and other variables and you might assume something about company's revenue growth or margins. 2)Create sources & uses section 3) Adjust company's balance sheet for the new debt, equity, Goodwill, and other intangibles. 4) Project company's income statement, balance sheet, and cash flow statement and determine debt schedule. 5)Assumptions about EBITDA exit multiple and calcul...