LBO with Cash Flow Statement but no Balance Sheet (HELP)
Received a minority growth case study from a PE firm.
In the instructions, they specified to only project (IS, CFS, Debt schedule) but do not want us to project the BS.
Under the operating assumptions, they listed the following:
Cash Flow Statement
- Assume day sales outstanding at 30 days in 2023 decreasing by 2 days every year
- Assume day payable outstanding at 40 days in 2023 growing by 2 days every year
- Assume capex at 3% of revenue
Wondering how would the first two bullets flow into the LBO model given they explicitly asked to not project the BS. Any thoughts?
Use the days sales outstanding and the days payable outstanding to build out a working capital schedule and use that to calculate change in net working capital when building your cash flow for debt service
I am not going to give you the answer but ask yourself, do you NEED a full balance sheet for an LBO? Why or why not? Think about what b/s items flow through your debt schedule.
Brother, if you need a BS to build the CFS, just build one but don’t include it in your final submission. Godspeed.
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