Generic LBO (Leveraged Buyout) Excel Model Template
Originally published: 04/07/2018 09:27
Last version published: 22/12/2018 16:46
Publication number: ELQ-99789-9
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Generic LBO (Leveraged Buyout) Excel Model Template

General LBO model with return calculations and integrated financial statements

The model template has the ability to enter up to 8 years. The user has the ability to enter both actuals and forecast numbers. In addition to the core operating assumptions the user has the ability to enter transaction and exit assumptions to reflect a leverage buy out (including one tranche of senior debt and deferred consideration). The user will also have the ability to build up assumptions for a discount rate based on WACC (Weighted Average Cost of Capital).

The core operations includes up to three sales divisions, the ability to add monthly seasonal trends.
The corporation tax is calculated in a flexible way to allow the user to determine the tax payments to fully reflect their own tax jurisdiction.

Other significant Profit and Loss balances include staff costs, rent and rates, maintenance and repairs, professional fees, and other exceptional items.
Significant Balance Sheet items include stock, debtors and creditors driven by working capital days assumptions. Calculations include VAT, corporation tax, interest, capital expenditure (and depreciation) and dividends.

Transaction assumptions include a flexible transaction date, assumptions around cash remaining in the business, the purchase price EBITDA (Earnings Before Interest Taxes Depreciation and Amortisation) multiple, transaction costs and the mix of funding sources (senior debt, deferred consideration via a vendor loan, and equity).

Exit assumptions include the exit date, the exit EBITDA multiple and transaction costs.
Senior debt has the flexibility to include an amortised arrangement fee as a percentage of debt raised. In addition, debt assumptions include the loan term, the schedule of amortisation payments (monthly/quarterly), the interest rate and the periodicity of interest roll up.

On valuation the user can enter the valuation date, the terminal growth rate and full WACC build up assumptions.

This Best Practice includes
1 Excel model

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Further information

To model IRR returns and valuation for a leveraged buy-out (LBO) transaction using a mix of senior debt, deferred consideration and equity

The user has some basic understanding of LBOs
The user has enough understanding of the business to enter sales, costs, working capital, capex and transaction assumptions
The user has a decent understanding of accounting
The transaction needs the option of using senior debt and/or deferred income (but doesn't have to)
Model can be used just for modelling a valuation and cash flows without using the transaction assumptions
Where flexibility is required to fully reflect tax calculations in your tax jurisdiction

When junior debt other than deferred income is required
When there are more than three sales divisions
If the user requires more than one type of depreciation rate for assets
When the user wishes to model intangibles other than goodwill (arising on transaction)
If the user requires more than one type of working capital assumptions for each of debtors, creditors and stock

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