“The Leveraged Buyout Module did a fantastic job of explaining the basics behind a leveraged buyout. The biggest takeaway I had from the module was how debt levels, interest rates and the exit multiple can impact investor returns.”

Leveraged Buyout Module

The Leveraged Buyout Module enables trainees to use their financial modeling skills to learn key concepts around transaction value, sources and uses of funds and investor returns.  The concept of a LBO and ways to drive returns is initially reviewed with trainees. Trainees then determine the level of debt to place on the target company and model out a full P&L and cash flow analysis to determine sustainability of debt service. Trainees ultimately assess investors returns based on debt levels, target projections and exit valuation estimates.

The Leveraged Buyout Module is designed for trainees who have already participated in our Financial Modeling Course. It typically lasts approximately two hours. In this course trainees use the financial model they have built in the Financial Modeling Course as a starting point and build a basic leveraged buyout analysis from “scratch”.

Module Description

Trainees receive a 1-tab blank spreadsheet, which they copy into the financial model they have built in the Financial Modeling Course. During this module trainees:

  • Determine the appropriate acquisition premium and resulting transaction value of a potential buyout
  • Build a sources and uses of capital schedule for the transaction to determine total leverage and equity requirements
  • Determine the optimal capital structure for the transaction
  • Build a P&L, debt pay down schedule and summary cash flow schedule
  • Determine appropriate exit assumptions
  • Calculate resulting investor returns and credit metrics