Bridge Loan is a term used frequently in investment banking, private equity and venture capital. It is a loan which is used to enable a firm to undertake an acquisition / takeover / LBO / IPO. In an LBO or other corporate acquisition-type activity, the PE or VC firm will go to the investment bank to seek a bridge loan, then will make the purchase of the target company. The firm will then use its newly acquired target to issue corporate high-yielding bonds to pay off the bridge loan, and then will use future cash flows to pay the bond yields. In an IPO, the bridge loan is secured in order to ensure that the company can continue operating whilst it navigates through the tumultuous time of IPO'ing onto the stock market. The company will give the investment bank some stock at a cheap price in order to pay off the bridge loan, and the investment bank sells the stock (if it so wishes) in order to recoup its loan.
To learn more about this concept and become a master at LBO modeling, you should check out our LBO Modeling Course. Learn more here.
Module 1: Introduction
Module 2: LBO The Big Picture
Module 3: Valuation and Transaction Assumptions
Module 4: Sources and Uses: The Theory
Module 5: Sources and Uses: Application to Nike Case
Module 6: P&L Projections & LBO Adjustments
Module 7: Debt Schedule
Module 8: Balance Sheet and Adjustments
Module 9: Taxes
Module 10: Exit, Returns, & Sensitivity Analysis
Bonus Module A) Purchase Price Accounting
Bonus Module B) Dividend Recap
Bonus Module C) Add-on Acquisition Build
To learn more about this concept and become a master at bonds and fixed income, you should check out our Bond Course - Fixed Income (coming soon!).
- Free Cash Flow (FCF)
- Investment Banking Division (IBD)
- Initial Public Offering (IPO)
- Leveraged Buyout (LBO)
- Private Equity (PE)
- Venture Capital (VC)