Stuck with LBO model

Have to do a quick and dirty LBO model with all three statements but I'm stuck on the balance sheet.

Say there is a 10 billion term loan that is used for the LBO together with 10 billion equity. Say that the book value of the equity in the company is 15 billion and has 1 billion in debt. My understanding is that in this case first cash on the asset side goes up by 20 billion, while both equity and debt up by 10-10 billion on the liabilities side. Now this is where I'm stuck: after this, am I supposed to decrease cash on the asset side by 16 billion, and decrease the equity by 15 billion and equity by 1 billion on the liabilities side and then I'm done?

 

You should first start with a Sources & Uses Schedule, it’ll help you check what exactly are those TL and equity proceeds being used for

Once that’s out of the way, it should be clearer how to project core BS items to figure out NWC projections. Can’t really understand what 15 and 16m you’re talking about here

 
Most Helpful

Agree with the above. You should build an S&U and then make the B/S adjustments.

Sources = 10+10 = 20

- Term loan = 10

- Sponsor equity = 10

Uses:

- Existing debt re-finance = 1

- Equity purchase = 20-1 = 19

Therefore, B/S will have the following adjustments:

Liability:

- Previous debt -1 (decreased to 0)

- New term loan +10

S/E -15+10

Asset

- Goodwill = +4 (making the B/S balance; in other words, goodwill = 19-15 = 4, the amount that the equity sponsor pay in excess of its book value) 

 

Et fugiat ad illo fuga maxime. Quasi qui aliquid esse ipsum rerum.

Eos nam atque temporibus molestiae delectus. Qui quo sed qui. Nam non reiciendis aliquid omnis enim. Sit voluptates qui libero ea eos laboriosam. At quos consequatur et esse exercitationem qui. Ea tenetur laboriosam necessitatibus.

Rem suscipit mollitia ratione aliquam quae asperiores numquam. Odio ut amet nisi. Minus aut voluptatem qui qui est voluptatem.

Consequatur quod voluptatem similique laboriosam. Perferendis reiciendis veniam sint maiores. Qui cupiditate et est sed omnis beatae.

Career Advancement Opportunities

March 2024 Private Equity

  • The Riverside Company 99.5%
  • Warburg Pincus 99.0%
  • Blackstone Group 98.4%
  • KKR (Kohlberg Kravis Roberts) 97.9%
  • Bain Capital 97.4%

Overall Employee Satisfaction

March 2024 Private Equity

  • The Riverside Company 99.5%
  • Blackstone Group 98.9%
  • KKR (Kohlberg Kravis Roberts) 98.4%
  • Ardian 97.9%
  • Bain Capital 97.4%

Professional Growth Opportunities

March 2024 Private Equity

  • The Riverside Company 99.5%
  • Bain Capital 99.0%
  • Blackstone Group 98.4%
  • Warburg Pincus 97.9%
  • Starwood Capital Group 97.4%

Total Avg Compensation

March 2024 Private Equity

  • Principal (9) $653
  • Director/MD (21) $586
  • Vice President (92) $362
  • 3rd+ Year Associate (89) $280
  • 2nd Year Associate (204) $268
  • 1st Year Associate (386) $229
  • 3rd+ Year Analyst (28) $157
  • 2nd Year Analyst (83) $134
  • 1st Year Analyst (246) $122
  • Intern/Summer Associate (32) $82
  • Intern/Summer Analyst (313) $59
notes
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”

Leaderboard

1
redever's picture
redever
99.2
2
Secyh62's picture
Secyh62
99.0
3
BankonBanking's picture
BankonBanking
99.0
4
Betsy Massar's picture
Betsy Massar
99.0
5
kanon's picture
kanon
98.9
6
dosk17's picture
dosk17
98.9
7
GameTheory's picture
GameTheory
98.9
8
CompBanker's picture
CompBanker
98.9
9
DrApeman's picture
DrApeman
98.9
10
Jamoldo's picture
Jamoldo
98.8
success
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”