Private Equity Acquisition Model
Originally published: 03/03/2021 08:43
Publication number: ELQ-20285-1
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Private Equity Acquisition Model

The Private Equity Acquisition Model provides a business valuation of a target company for investment.

The Private Equity Acquisition Model provides a business valuation of a target company for investment. The Private Equity Acquisition Model allows for multiple payment scenarios and Entry/Exit Multiple while analyzing a target business for acquisition. 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
• Supporting Schedules Section for PPE and Working Capital
• Deal Assumptions section highlighting payment structure, Entry/Exit Multiples, Terminal Value and Purchase Price
• Levered and Unlevered Free Cash Flows using Discounted Cash Flows and Leveraged Buyout, respectively
• IRR Sensitivity Analysis using Entry/Exit multiples and Purchase Price

First is the Assumptions sections where Assumptions are entered in the cells for the projection periods. All assumptions can be modified to fit specific key drivers of the business to see their impact on the Private Equity Model. Up to 5 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. The Supporting Schedules section consists of all formulas that are tied to the Assumptions and 3 Statement sections so no editing is necessary. The Valuation & Returns section consists of a separate set of assumptions pertaining to the Timing of Payments, Terminal Value and Other Assumptions to drive the valuation along with projected Unlevered Free Cash Flow. There is a Returns Analysis that will give you Net Present Value, IRR and Cash on Cash multiple based on the DCF Valuation. The levered returns follows a Leveraged Buyout (LBO) structure were the terms of the loan can be input to determine the IRR and Cash on Cash multiple of the Levered Free Cash Flow. Lastly, the Sensitivity Analysis measures the impact of the Entry/Exit Multiple and Purchase on the IRR of the acquisition.

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.

This Best Practice includes
1 Excel Template

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Further information

Provide tool for private investment into target businesses.

Best used for private investors looking to fund a target business for equity in the business

Non investment financial forecasts.


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