Trending Content - Private Equity Forum
| +91 | Cognitive decline | 30 | 9m |
| +55 | Vibe-Working in Finance with AI ? What about you | 34 | 19h |
| +49 | Del | 26 | 2d |
| +44 | PE VP: Thoughts on Quitting with Nothing Lined Up? | 15 | 1h |
| +18 | How do PE funds choose their advisors? | 8 | 21h |
| +18 | Acquisition Deal Structure: More Cash at Close vs. Smaller Equity Rollover in a Holdco | 3 | 3d |
| +17 | Is buyside worth it if most associate programs are 2 and out? | 4 | 4d |
| +13 | Management consulting or munis? | 6 | 4d |
| +13 | How Cooked is Software PE? | 1 | 2d |
| +12 | Indian PE Landscape | 2 | 1d |
Career Resources
Νο?
No. Unironically, the S&U is the easiest part? It is like 3-10 rows in Excel (ignoring outlier cases).
Same goes for cap table, it’s part of the story. The three most important things are 1. S&U 2. PF Cap 3. FCF
? Why would you even make a separate cap table. Makes no sense
It takes a minute, but it explains % equity, purchase multiple, leverage multiple, cap structure in 8+ cells.
My opinion is that without a S&U it's not really an LBO model, it would really just be a 3 statement model. One of the key points of the LBO is that you flow the S&U through the financial statements and the do the basic purchase accounting to bridge into the pro-forma BS. I guess you could theoretically do an LBO without one, but it would be very odd.
If you did a modeling test, even a really quick one like a paper LBO or an hour long quick build, but omitted a S&U, that's probably an insta-ding in my opinion. Would show me that you really don't know the basics of an LBO.
I disagree with the cap table comment above though. You can show a simple one if you want, but unless you're given some info around the transaction, it's pretty safe to assume 100% ownership or 85% ownership with a 15% option pool. I definitely don't think a cap table is more important than showing FCF calcs.
Edit: Looking back at the comments, it seems like the cap table comment might have been in reference to a transactions assumption box, which should also be included. I wouldn't call that a cap table, but you should also have a basic area where you basically do EBITDA, Entry EV/EBITDA Multiple, Enterprise Value, Cash, Debt, Equity Value and then use that purchase equity as one of the main items on your S&U.
Don't see why you wouldn't... If nothing else, it gives you a sanity check on your transaction assumptions and acts as a guiding framework for the rest of the model.
No, its not an LBO without S&U. You backsolve purchase price via the target MOIC/IRR, which I don't see being possible without having at least a standard S&U table...
If this is a real question...get your nose stuck into the theory books and practice LBOs. S&U is the hook on which you hang the story about stuff such as (i) deal fees, (ii) min. cash balance, (iii) founder roll-over, sponsor equity contrib, etc, and so forth. Its an easy part where you can do a lot of 'storytelling' to showcase your understanding on the transaction process. As others mentioned: its the framework - the basis of the post-deal cap table, returns, etc.
Purely theoretical - can you do it without - yes, but you'll have bits & pieces of it scattered throughout your model.
Omnis odit quas ut odio. Cumque modi quia minima et labore ut aut. Rerum aut dolores ut quasi.
Aut nihil aut sit deleniti laudantium. Saepe repellendus totam rerum totam. Qui facere quia itaque cupiditate.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...