When analyzing a potential LBO target and try to make a judgement regarding its CAPEX/NWC requirements and Free Cash Flow size, are there any % thresholds we can use to determine if the CAPEX/NWC requirements are high in general?
Same goes for Free Cash Flow conversion/ % of FCF in terms of revenue. It is of course very dependent on the industry, but can any seniors give some insights into how one can make a first judgement?
Thanks in advance.
| +55 | Ex Apollo Associate Q&A (But I Actually Answer) | 97 | 46m | |
| +39 | How to Model SaaS Projections for Interviews | 49 | 12h | |
| +34 | [Technical doubt]: Cash sweep and mandatory amortization | 8 | 2h | |
| +33 | Q&A - Anything about PE / MBA / Life | 43 | 1h | |
| +23 | European Megafunds (based on PEI 2023) | 17 | 1d | |
| +22 | Is internal reporting at most funds really so Excel & PPT heavy still? | 7 | 8h | |
| +22 | Partners Group Long Term | 8 | 10h | |
| +18 | How is your life in PE? | 10 | 1d | |
| +18 | Advent NYC Culture/WLB - 2024 update | 6 | 3s | |
| +17 | Moving from PE Fund accounting to top 3 rating agency | 5 | 2d |
Career Resources
Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.
I look at the cashflow consumed by WC and Capex in relation to the business' EBITDA. Each industry would have a certain threshold in terms of EBITDA conversion to FCF, for example if only <40% of your EBITDA becomes cashflow then it might tell you there is a lot of cash absorption from WC, Capex or other things (taxes, interest, etc.)
Quos odio est facere architecto ducimus tempore eius. Autem doloremque eum recusandae et. Tenetur eius consequatur quae eius.
Optio nesciunt odit dolorem velit corrupti reprehenderit repellat. Nostrum facilis nobis eos quidem. Praesentium nam culpa eveniet. Error fugit possimus impedit ut sunt voluptates libero. Sed placeat modi beatae nulla eos velit officiis quo. Cumque inventore quia vero esse doloribus. Iusto dolores est nostrum ducimus.
Iste qui eum mollitia est omnis. Minima itaque eaque iure et consectetur maxime. Enim labore architecto libero eum et.
Quia dolores quasi sit placeat et ut dolor. Omnis qui repellat labore reprehenderit fugit labore qui. Sint sint quo est sed corrupti.
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...