Leveraged Buyout LBO Model - DCF
Originally published: 28/06/2016 14:43
Last version published: 22/03/2021 08:13
Publication number: ELQ-65533-3
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Leveraged Buyout LBO Model - DCF

A comprehensive LBO model in Excel, of business acquisition


A comprehensive LBO model of business acquisition with DCF Analysis, IRR, WACC, CAPM, Ratio Analysis with 10-Year Projections of Financial Statements and Cash Flows.

A leveraged buyout (LBO) is an acquisition of a company or a segment of a company funded mostly with debt. A financial buyer (e.g. private equity fund) invests a small amount of equity (relative to the total purchase price) and uses leverage (debt or other non-equity sources of financing) to fund the remainder of the consideration paid to the seller.

The LBO model provides a current valuation to an investor based on future cash flows and financial projections, helping the investor to determine a fair consideration for the business he intends to acquire. The aim is to enable an investor determine a risk-adjusted Internal Rate of Return (IRR) of the target company after considering the multiple components of financing and analyzing the key financial ratios. A leveraged buyout is the act of purchasing a business or company using leverage and a professional financial model is vital to consider the various aspects and scenarios to evaluate the transaction.

Note: You are welcome to report any errors or any suggestion for improvement. I will earnestly consider all your valuable inputs.

This Best Practice includes
1 Excel Model File

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Discussion feed for Leveraged Buyout LBO Model - DCF

The user community and author are here to help. Go ahead!

    What is the rationale of having cash minimum? How does this affect the model?
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    • VICTORIA933
      Can you explain to me the goodwill / bargain purchase calculations from Cell C43 - Cell C53 in the 'Input' tab?
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      • Paul Whitley
        Almost every tab has a circular in it, how can I fix it?
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        • Amit Tandon
          Apologies for the delay response. You will need to "Enable iterative calculation" in Options > Formulas, so as to allow circular calculations.

          Best Regards
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        4.8 / 5 (56 votes)

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