Three Statement EBITDA vs LBO EBITDA
I'm currently working through a case study, and finished forecasting my three statement model through 5 year ends, however was confused if my year end EBITDA estimations are different from the values I should be using in my LBO, since at the time of modeling it's the middle of the year. I calculated LTM EBITDA by taking YTD revenue estimates and multiplying by projected year end EBITDA margin, then took that # as a % of FY EBITDA. Assuming a similar rate, I took 1 - that % and multiplied it by the previous year's EBITDA to make up the remainder of LTM. I imagine I'm way over complicating the estimations, so is there a way LTM EBITDA is typically assumed half-way through a FY? And then how could I take my projections from the year end 3 statement model and find EBITDA through year 5?
Big dawg, with all due respect what the fuck lmao.
Your 3-statement year-end projection forecast is the master. This is your bible. Let’s assume you build down to EBITDA here, and you’ve included historical. Now, your LBO will pull from this.
NOW, you stub your EBITDA: x% current YE EBITDA + (1-x%) last YE EBITDA.
Then, for your calculations that build down to net cashflows (LFCF and IRR), the first “period,” (tbh I’d call this year 0), multiply everything by x% (Sept close = 25%). Then the exit year (assuming constant 5-yr hold), you multiple year 5 by (1-x%), which in this case would be sept close. For calculating exit, you use the LTM EBITDA as of Sept.
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