Aug 31, 2024

Take Private LBO Case Study

Have an upcoming case study where I'll be given a public company, and need to put together a three-statement LBO and two-page investment memo.

Is there anything I should be doing differently in terms of preparation and how to handle this? I have been doing all the usual LBO modelling prep (WSO, other online templates, etc.), but want to make sure I'm not missing anything. Curious if anyone has done one of these or has some additional insight into what to expect and prepare for. Thanks!

10 Comments

Analyst 1 in IB-M&A

Shameless WSO plug, you're not slick Patrick

Quote

Report

Other

chihayafull

Most Helpful

Sounds really stupid, but refresh yourself on comps for the S+U. So like all share counts/options, gross debt figures, etc. remember that you’re gonna have to actually refinance the debt as a Use (and not just put it as “Purchase Price” as it’s not cash/debt free.
Small detail, but higher fees to account for legal and the fact that you’re on the hook for sell side fees. This is a broader thing about take privates, but you inherit the company as-is, including rolling the entire balance sheet
For the Memo, you should have some “take-private rationale.” This isn’t a banked process where the seller is tryna cash out, there needs to be a reason why the company would do better as a private company, and why now. For example, say there’s a growing segment that needs time and investment to scale into a new market that doesn’t work with quarterly investor guidance. Or perhaps they seem really bloated versus peers (low margins in similar industry?). Stock has taken a nose dive, worth looking into? Any other reason why the stock is mispriced? Mid-market company that nobody gives af about?
Relates to above, but what can you underwrite that won’t exist in the public markets? A very easy (and imo stupid) example is a couple million of public company cost savings (no more compliance bs, treasury, etc). You also need to make sure you’re valuing it at a sufficient premium to what it’s trading at. For example, if you have a 10% premium in your most optimistic scenario, should be realistic that that’s not gonna cut it.

Quote

Report

Other

Authored by: Certified Private Equity Professional - 2nd Year AssociateCertified Private Equity Pro

Analyst 2 in IB-M&A

Could you please elaborate on what the S&U would look like for a take private vs a typical private co deal?

Quote

Report

Other

Authored by: Certified Investment Banking Professional - 3rd+ Year AnalystCertified Investment Banking Pro

chihayafull

Regular cash-free debt-free txn:

Sources:
- Sponsor equity investment (plug)
- Debt (based on leverage on EBITDA)
Uses
- Purchase Price (EV)
- Fees (txn and financing fees)

Take-private:

Sources
- Sponsor equity investment (plug)
- Debt (based on leverage on EBITDA)
Uses
- Share purchase (FDSO incl. options, RSUs, other mgt incentives)
- Existing debt Repayment (incl. any other nuances, like prepayment fees, any other CoC that needs to be paid)
- Fees, which are larger (sell-side fees, higher legal fees, debt financing)
  - Incl. in fees, any other obligations that are going to need to be paid. For example, D&O insurance, severance, etc)

The difference in the cash-free debt-free, you essentially just pay the EV and let the selling party deal with their own debt repayment, fees, and other shit. In a take-private, you have to actually find and confirm everything you need to pay for.

Quote

Report

Other

Authored by: Certified Private Equity Professional - 2nd Year AssociateCertified Private Equity Pro

1 reply

jmacattack2004

I have a test or two that could be helpful, DM if interested

Quote

Report

Other

MA6500

Hi - could you also share these with me? Would really appreciate it.

Quote

Report

Other

Buy Side Analyst Job Description

JamieP123123

could you share please

Quote

Report

Other

Authored by: Certified Investment Banking Professional - 3rd+ Year AnalystCertified Investment Banking Pro

Analyst 1 in IB - Cov

this guy is a loser who sells case studies. look at all his comments lol. ignore the loser.

Quote

Report

Other

Analyst 2 in IB-M&A

Occaecati dolorem rerum consequatur. Aut sed et dolores non similique perferendis. Molestias eum eos pariatur. Unde dolor officiis voluptates et.

Quam et et nihil illo ea qui. Eos molestiae tenetur voluptas magnam illum laboriosam est. Hic iure animi est sed necessitatibus cum. Id voluptatem est velit non amet dolor. Perferendis eos suscipit ipsam omnis ut alias ipsam voluptas. Accusamus nisi dolorem nobis vitae laborum placeat qui. Et maxime incidunt aliquid odio consectetur repellendus vero voluptas.

Ut hic ratione autem quidem dolores ipsam vel. Voluptates velit magni veritatis labore aliquid molestias. Consectetur dolorem maxime dolor adipisci omnis.

Quote

Report

Other

Authored by: Certified Investment Banking Professional - 3rd+ Year AnalystCertified Investment Banking Pro

+51	Working for Free in PE	12	40m
+39	Life Advice After Banking/PE (Rising College Jr.)	5	2d
+18	WLB in PE 2026?	6	2d
+15	Brookfield vs. TPG Angelo Gordon (in LA)	1	17h
+15	Private Investing at a BB vs. Traditional IB → PE	1	1d
+15	lucked into PE, What now?	12	1d
+11	Comp check — Associate at small first-time Swiss PE fund (CHF 90k base + deal fees + 0.5% carry). Fair or getting squeezed?	1	39m
+9	MM IB (non-tech group) with HSW 2+2 — direct tech PE/growth recruiting vs. going straight to MBA?	3	3d
+9	How to Break into Credit / Hybrid Capital from M&A? (London)	1	5d
+8	Senior Associate — Lateral Again Within a Year?	2	5d

1	redever	99.2
2	kanon	99.0
3	Secyh62	99.0
4	BankonBanking	99.0
5	dosk17	98.9
6	Betsy Massar	98.9
7	CompBanker	98.9
8	GameTheory	98.9
9	DrApeman	98.9
10	Mimbs	98.8

Elite Career Bootcamp. Top Job Offer Guaranteed.

Elite Career Bootcamp. Top Job Offer Guaranteed.

Take Private LBO Case Study

Elite Career Bootcamp. Top Job Offer Guaranteed.

Elite Career Bootcamp. Top Job Offer Guaranteed.

Take Private LBO Case Study

See All Comments - 100% Free

Trending Content - Private Equity Forum