• Originally published: 17/06/2016 13:40
Last version published: 02/02/2018 14:49
Publication number: ELQ-57262-6
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# Merger & LBO Model Valuation Excel

This LBO model in excel analyzes the value of equity and the firm in a leveraged buyout operation.

Description
In the context of a Leveraged buyout this 6 step LBO excel model will enable you to know if the deal should be accepted by equity investors and all investors by computing the present value of cash flows.

STEP 1: Estimate the total cost of the deal
STEP 2: Define how the deal will be financed
STEP 3: Define rates of future growth
STEP 4: GENERAL INFORMATION
STEP 5: SPECIFY ASSETS TO BE SOLD (Enter the year in which assets will be sold and market value and CF to the firm from those assets)
STEP 6: ENTER INFORMATION ON CURRENT INCOME STATEMENT

- Prof. Aswath Damodaran

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## Further information

### Objectives

This LBO model will enable you to make a decision on wether your merger & Leveraged Buyout (LBO) has to be accepted, from the equity and other investors point of view by giving the following output data:

- Present Value (PV) of Cash Flows (CF) vs Initial Investment for Equity Investors and All Investors
- Cashflow to Equity Investors (Average Free Cash Flow to Equity (FCFE), Maximum FCFE, Minimum FCFE, Standard Deviation of FCFE
- Leverage (Debt/Equity Ratio before LBO, Debt/Equity after LBO, Debt/Equity Ratio in year 5, Debt/Equity Ratio in year 10)
- Beta (Beta before LBO, Beta after LBO, Beta in year 10)

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