Finding suitable LBO targets
Hi guys,
How would you go about selecting an appropriate LBO candidate which would fulfill 2 purposes:
a) practice the technical LBO modeling aspects but also b) simulate whether the target would actually make an interesting LBO candidate...i.e. giving the practice some real life application and kick ...rather than just taking company X financials from 3 years ago...
How would you go about screening for right candidates given no access to Capital IQ, Factset.
Your ideas are highly appreciated! Thx
If you're just looking to practice modelling then take a company in a stable industry which is large enough that you can get plenty of information on it. Even without Cap IQ you can get rough forward projections for a couple years and you could also run scenario analyis for growth.
You can practice 'technical' LBO modelling (although not certain what you mean on this) on most companies in the sense of modelling cash flows, running different cap structures and IRR scenarios.
ok, thx for the info - it addresses the practicing aspect.
...but how would you go about identifying/screening for interesting candidates yourself?
As indicated below Finviz is good. Personally I'd look industry by industry at stock price over last twelve months and think myself (with ratio analysis etc) whether a company is underpriced compared to competitors, what potential is for steady cash flow in the future.
Again it depends what the point of your exercise is.
You can use finviz.com. There's a section that helps screens stocks to match criteria you're looking to match.
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