Hey everyone,
So, naturally I have little to no advanced modeling skills. However, I've taken it upon myself to teach myself to build a fully functional, dexterous LBO model. I've been using Rosenbaum's Investment Banking book to guide myself through it (unfortunately, I do not have his models*). There seem to be some inconsistencies in his model and conclusions that he doesn't explain, e.g. Deferred Financing Fees amortized in the I/S --> he starts the fees before projections start(in the Pro forma year), so if you add up the total amortized fees, they are greater than the nominal fee.
Anyways, I'd love to be able to figure some of my problems out myself, however would truly appreciate anyone who has the ability to glance over it quickly and let me know if I should make some corrections(hint: can't figure out how he models IRR sensitivity tables). Of course, SBs await.
Thank you all!
An always learning monkey.
*Also, if anyone would be willing to provide me with his models, I'd very much appreciate it and reward you the same.
| Attachment | Size |
|---|---|
| LBO Model.xls 150 KB | 150 KB |
Can you link it here? Does he add some type of interested to the deferred fees? I'd have to see it.
I'll try to link it tomorrow morning. And I don't think so, it seems like it was straight line amortized. That's part of the problem, the book doesn't go into some of the details that I think would be pretty important in some of the assumptions that they make, then again maybe I'm just missing something as this is my first time building an LBO model.
Deferred fees are shown in the pro forma year because it is just that, pro forma as though the acquisition had happened prior to that year. But that year does not actually amortize that year or decrease any B/S accounts, it's pro-forma (aka illustrative). If you take all the projected fees those should add up properly (similar to how showing a pro-forma year in a merger doesn't actually mean in the last year you get all the earnings from the acquired company, it's just showing illustratively what it would be like if it did happen).
Also, IRR tables those are very simple if you know how to work the main excel functions. If you're having trouble with those you should go review excel concepts such as data tables (or sell referencing if statements with an incrementing macro, whatever your preference).
I've attached the model and thanks IBPrepared. I'm not sure what you mean for the IRR tables, as I tried multiple methods, however the numbers that I need to reference for IRR are linked to the single IRR calculation table. Not sure if I'm communicating this correctly though. Anyways, please feel free to check it out for yourself. Also, please disregard some of the mess. Still a work in progress.
I guess, the biggest problem I'm having right now is the returns analysis tab. Thanks again guys
He simply built the formula into Year 1 and then linked pro forma to that value, since the value is constant.
Your model looks good.
PM'd you the R&P model.
Thanks! Really appreciate it. Never worked with an LBO model, so some assumptions kinda threw me for a loop.
The book will help some with that, but the most informative aspect for me was going through the model and if there was something foreign, just investigate the formula. Once you realize how something is calculated or where it is pulling from, it will start to click.
double post
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