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    LBO Caselet

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    uttam.sharma289

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    © All Rights Reserved
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    LBO Caselet

    Uploaded by

    uttam.sharma289
    0 views6 pages

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    Copyright:

    © All Rights Reserved
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    Download as xlsx, pdf, or txt
    0 views6 pages

    LBO Caselet

    Uploaded by

    uttam.sharma289

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    of 6

    Simple LBO Model Example - Private Company

    ($ in Millions)

    Transaction Assumptions: Units:

    EBITDA Purchase Multiple: x 12.0 x EBITDA Exit Multiple:

    Purchase Enterprise Value: $M $ 600 Minimum Cash % EBITDA:


    (+) Cash: $M 50 Tax Rate:
    (-) Debt: $M (100)
    Purchase Equity Value: $M 550 Advisory Fee %:
    Debt Issuance Fee %:
    Leverage Ratio: x 5.0 x
    Debt Used: $M 250 Legal and Other Fees:
    Interest Rate: % 5.0%

    Sources & Uses for a Cash-Free, Debt-Free Deal:

    Sources: Use
    New Debt Issued: $ 250 Purchase Enterprise Value of T
    Investor Equity: 373 Transaction Fees:
    Total Sources: $ 623 Financing Fees:
    Minimum Cash:
    Total Uses:

    CHECK:

    Income Statement: Year 0 Year 1 Year 2


    Revenue: $ 250 $ 275 $ 297
    Growth Rate: 10% 8%

    EBITDA: 50 58 65
    Margin: 20% 21% 22%
    Growth Rate: 16% 13%

    (-) Depreciation & Amortization: (28) (27)


    % of Revenue: (10%) (9%)

    (-) Interest Expense: (13) (11)

    Pre-Tax Income: 18 28
    (-) Taxes: (4) (7)
    Net Income: $ 13 $ 21
    Cash Flow and Debt Repayment: Year 0 Year 1 Year 2
    Net Income: $ 13 $ 21

    (+) Depreciation & Amortization: 28 27


    (+/-) Change in Working Capital: (2.5) (1.1)
    % of Change in Revenue: (10%) (5%)

    (-) CapEx: (5) (4)


    % of Change in Revenue: (20%) (19%)

    (+) Beginning Cash Balance: 10 12


    (+) Free Cash Flow: 33 42
    (-) Minimum Cash Balance: (12) (13)
    Cash Flow Available for Debt Repayment: 32 41

    Cash Flow Used for Debt Repayment: 32 41

    Debt Balance: 250 218 178


    Cash Balance: 10 12 13
    Equity Balance: 373 386 407

    Invested Capital: 622.50 604.05 584.12


    NOPAT: 23 29
    Return on Invested Capital (ROIC): 4% 5%

    Money-on-Money (MoM) Multiple:


    Internal Rate of Return (IRR):
    Units:

    DA Exit Multiple: x 12.0 x

    mum Cash % EBITDA: % 20.0%


    % 25.0%

    sory Fee %: % 1.0%


    Issuance Fee %: % 2.0%

    l and Other Fees: $M $ 2

    Uses:
    chase Enterprise Value of Target: $ 600
    nsaction Fees: 8 NOPAT=
    ancing Fees: 5 IC = D+E
    nimum Cash: 10 ROIC = NOPAT / AVG IC
    $ 623
    Diff b/w ROIC and ROCE
    OK!

    Year 3 Year 4 Year 5


    $ 315 $ 331 $ 347
    6% 5% 5%

    72 79 87
    23% 24% 25%
    11% 10% 9%

    (25) (23) (21)


    (8%) (7%) (6%)

    (9) (6) (4)

    38 50 62
    (10) (12) (16)
    $ 29 $ 37 $ 47
    Year 3 Year 4 Year 5
    $ 29 $ 37 $ 47

    25 23 21
    - 0.4 0.8
    0% 3% 5%

    (3) (3) (3)


    (18%) (17%) (16%)

    13 14 16
    51 58 66
    (14) (16) (17)
    49 57 64

    49 57 64

    128 71 7
    14 16 17
    435 473 519

    563.55 544.08 526.56


    35 42 49
    6% 8% 9%

    Exit Calculations:
    Exit Enterprise Value: $ 1,041
    (-) Debt: (7)
    (+) Cash: 17
    Equity Proceeds: $ 1,052

    2.8 x Ending value / Initial Payment


    23%
    EBIT*(1-T)

    OIC = NOPAT / AVG IC

    iff b/w ROIC and ROCE


    / Initial Payment

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