LBO Modeling Questions
Hey all, I have an upcoming modeling test for a couple of MM/UMM funds and would appreciate claryifing a couple of points relating to LBO modeling:
- SBC - How to treat them in the context of an LBO? For the projection years, should I take into account any SBC? Say I have a SaaS company that historically has had ~30% of Adj. EBITDA in the form of SBC. Most of the public comps forward multiples are based on SBC adjusted EBITDA, thus there might be some distortion on entry vs exit multiples.
- Management Option Pool / Incentive Plan - I came across several methods of dealing with those but would be good to know what's the standard way of modeling those out. Say on entry sponsor owns 100% and grants 10% MIP. What proceeds does sponsor receive on exit, assuming equity value (pre MIP) is 1,000?
bump
How do you pay out SBC on a private company?
Thanks! So for SBC, I can simply ignore it (ie won't add it back to EBITDA) when analyze public comps prior to the LBO?
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