Hi everyone!
I recently got introduced to the LBO model and wanted to ask you a couple of clarifying questions. How do you come up with the price you have to pay for the target. Do you build a three statement model and use it to perform DCF/comps to value it and then adjust depending on the situation or some other methodologies are used?
To learn more about the process, are there any good LBO investment decks that are circulating online. I wanted to see how investors think when they present LBOs.
Thanks!
Price you have to pay is based on negotiations
Price you have to pay is based on negotiations
The LBO is a dynamic model that allows you to see different scenarios after inputting certain assumptions.
1. You could assume a certain purchase price based on DCF or comps multiples and then calculate the IRR if you were to purchase at the said price.
2. You could also assume a "target IRR" (maybe 20-30%) and then figure out the maximum price you can pay to achieve the "target IRR".
Check out 10xEBITDA for presentation examples.
Voluptas voluptatum nesciunt aut. Molestiae reprehenderit dolore placeat beatae enim. Ut doloribus rerum ab eos architecto. Repudiandae et in architecto alias magnam sit illo ut. Sit perferendis optio blanditiis voluptatem voluptatem quae. Animi assumenda dolorum officia repudiandae. Laborum voluptatibus non sed sapiente et aut aliquam ipsum.
Ipsa voluptatum minus qui eos et nam. Reiciendis deleniti unde et qui accusantium repellendus adipisci. Error nostrum qui perferendis cum veritatis rem veritatis illum. Assumenda necessitatibus quasi voluptatem perferendis. Pariatur rem facere omnis voluptatem rem non natus. Id culpa magni illum sit voluptatem eligendi.
Sint nobis eius ad reprehenderit sit. Alias laudantium est quo dolore. Ullam et vero architecto rem. Ea eos et expedita id illum exercitationem.
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...