Hi guys -
Building an lbo model for the first time and having trouble balancing the model. Gone through everything and not having any luck. Any help would be massively appreciated
Cheers
| Attachment | Size |
|---|---|
| practice_model_6_23_wso_upload.xls 152 KB | 152 KB |
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You're not accruing retained earnings and you doing an average of debt values to get your interest payments. Should fix it.
Also, format your numbers a bit more. Use the "accounting" format for numbers, percents for percents, blue font for inputs, green for links between cells.
The assumptions (http://www.streetofwalls.com/finance-training-courses/private-equity-tr…) says to use average balances for calculating Interest Expense - does this still meaning im doing it incorrectly? Thank you muchly
Edit: the accrual issue was pt one of the fix, really appreciate it
Also, deferred financing fees are a non-cash expense, so those should be added back in your CFS, which will clear up the difference in your first year and accumulated difference once you make the above change.
Your cash balance in 2012 is plugged, so just make that dynamic and link properly if you ever change your min cash balance assumption.
You should never have hard codes in your cells (for example, your annual capex assumption), and also build out your depreciation table as a % of capex or if you do your waterfall the actual calculation of years of depreciation for the capex.
Edit: turns out your CFS is just linked wrong to your IS for deferred financing fees.
That was the issue - you're a saint. Broke out the interest on the IS and forgot to re-check links for the other parts.
Gracias amigo
Why not regress cogs to revenue and grow revenue by that as your base?
There are many questionable assumptions in his model. Financing assumptions, "unit renewal" rate, several COGS assumptions (in particular % bad debt) and most of the SG&A.
Gotcha, I was reading it on my phone
Would suggest using the WSO Template given the nine practice lbo models available.
Those models have helped me a ton in practicing to LBO like a pro....
Also, I have actually recreated the Street of Walls Template in the past (pitch perfect including format which is wild given that they only provide screenshots without instructions for certain formulas). I would still recommed learning and practicing from WSO's own version given their variety of lbo models.
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