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Leveraged Buyout (LBO) models
What is a Leveraged Buyout (LBO) and what is LBO analysis?
The leveraged buyout model (LBO) is the act of acquiring a company or a section of a company mostly funded by borrowed money, so that the cost of acquisition can be met. The acquiring company’s assets along with the assets of the target company most often serve as collateral for the loan(s). Hence, this allows the acquiring company to make large acquisitions without having to use a huge amount of financial capital.
The Leveraged Buyout (LBO) process works in two major steps. First, the new investors (the acquiring company) form a new corporation, specifically for the acquisition of the target. Secondly, the target becomes a subsidiary of the new corporation or both entities merge.
LBOs can either be a public company bought by a private-held entity, spin-offs (public or private corporations selling of elements of their business to gain cash) or private deals between private entities.
More about types of LBO transactions here
When is a Leveraged Buyout (LBO) analysis used?
Given the need for a positive return on investment on such an operation, a thorough LBO analysis is often needed and undertaken by the acquiring firm. The LBO analysis enables to:
1- Compute the highest possible purchase price for a target company, that can be afforded by the prospecting acquiring firm according to certain leverage (debt) levels and other returns on equity parameters.
2- Get an idea of the leverage and equity characterising a possible LBO transaction for a given purchase price.
3- Determine the minimum valuation acceptable for an LBO firm looking to acquire the target company. As LBO transactions are often carried out in the absence of strategic buyers, the firm should only accept possible transactions that give an expected return on equity higher than the LBO firms hurdle rate.
All of this is done through complex LBO Models in Excel often drafted by financial modelling experts for the acquiring firm.
More on LBO Analysis here
How can I learn about the mechanisms of a Leveraged Buyout LBO Analysis?
LBO analysis is carried out by LBO firms, private equity and investment banking firms using a number of financial tools, and step-by-step methodologies.
To learn the mechanisms of the LBO analysis you can decide to approach to tackle the issue in multiple ways. If you have some time available, you can decide to take a course (online or offline) on the topic so that you can get a deep and broad understanding of the subject. If you would like to learn on the job, you can also apply for a job in an LBO firm as an analyst where you will have the opportunity to learn from the best professionals using proven methodologies.
Where can I find Leveraged Buyout LBO Models in excel as examples?
If you would simply like to find a tool to help you out in an LBO transaction, or simply to understand the steps and methods, you can check the LBO models published below in the Eloquens Catalog and which are very useful Leveraged Buyout Examples. These LBO models are drafted by some of the best professionals, academics and experts on market and are ready-to-use in LBO analysis and to apply. Good luck!
Most popular models
Chapters Model with Leveraged Buyout LBO AnalysisA full financial model to understand the mechanics of an organisation using Valuation, LBO, & Financial Reports762 remove_red_eyefreeby Joshua Wong
Simple Leveraged Buyout (LBO) Model Excel Template + InstructionsExcel model tutorial for building a detailed Leveraged Buyout Analysis.153 remove_red_eye
All in One Private Equity ModelUsed by Investment Professionals at Private Equity and IB Firms4,538 remove_red_eye$180.00by John Swan
LBO Financial Model Excel Template (Illustrative)LBO (Leveraged Buyout) financial model for private companies (clean, simple, functional, and reusable template).382 remove_red_eye$100.00by Karl Schopf
An Introduction to Leverage AnalysisA quick and informative video on leverage analysis.30 remove_red_eye
Quarterly Leveraged Buyout LBO ModelAn LBO model illustrating a number of detailed analytical techniques to construct an acquisition LBO model with history924 remove_red_eye
LBO model - Leveraged Buyout AnalysisA step by step LBO model tutorial. It is easy to use and we provide support if needed. Have fun modeling!11,552 remove_red_eye
LBO Model - Company Valuation ToolAn LBO Model to learn how to Value all types of Businesses Like a Private Equity Professional2,330 remove_red_eyefreeby Jon Taylor
Merger & LBO Model Valuation ExcelThis LBO model in excel analyzes the value of equity and the firm in a leveraged buyout operation.5,728 remove_red_eye
Leveraged Buyout LBO ModelA fully customizable excel LBO model to assess the debt level your firm can take in a deal & expected investor returns3,724 remove_red_eyefreeby Firmex
Leveraged Buyout LBO Model - DCFA comprehensive LBO model in excel of business acquisition2,082 remove_red_eyefreeby Amit Tandon
Leveraged Buyout LBO Model TemplateA full Leveraged Buyout LBO model template for a project to understand its different components and work with your own.3,388 remove_red_eyefreeby John P. Burns
LBO Excel Model - with Capital Structure AnalysisAdvanced financial model for Leveraged Buyout with analysis of the capital structure.128 remove_red_eye
Simple LBO Template Excel Model (Leveraged Buyout)This LBO excel model will help you to view the possible opportunity when potentially acquiring a company with debt.215 remove_red_eye$9.00by Alexander Jarvis
Planeamatic: Financial modeling made easyPowerful, flexible, reliable and friendly financial models in minutes209 remove_red_eyefreeby Jose Corona
LBO Modeling Test ExampleThis guide helps you prepare and practice LBO modeling tests in preparation for future interviews on equity positions.578 remove_red_eye
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