LBO model: Excel template with bolt on capacity?

Hi all,

Anybody have any tips or a URL to some guidance for how to include bolt on capacity to a lbo model?

Never done it before, and having a hard time figuring out an efficient way to make it happen.

Or, do you have to just nested "IF" everything?

 

What exactly do you mean when you say "bolt on" capacity? Do you mean ability to add additional debt? To make bolt-on acquisitions? If it is to take on additional debt you can just have additional tranches that are empty and hold no principal, thus charge no interest, but if triggered by a case would populate. You can also just link up infinite cases for infinite issuance sizes, tenors, amortization schedules, optional pre-pays, et al.

You can make it rain in that bitch if you want...

 
Best Response

FWIW - (and slightly off topic) Whatever you do try to stay away from nested IFs. And really any LONG formula with multiple layers and ANDs and ORs within ANDs and ORs.

Your goal should be one IF. Any more and you should start setting up tables for conditional behavior, or write your own formula, or work through VBA. (the last two are kinds down the same track).

The main point is this - there will come a time when it is late, some shit has happened and you don't know what the frontdoor is going on. As the minutes go by and you are sweating this thing that isn't quite working you will make mistakes in figuring out your own logic set up many moons ago. You may even find yourself discovering and "correcting" errors you made in the past. Only they weren't errors at all. You had cleverly gotten them right then and have now quite forgotten why that was the case.

Tables for conditional behavior are pretty simple. If you have n IFs then you can have several columns, each taking its own piece of the logic (each with 1 IF if you will) and the column header or note can specify what logic or problem this bit will solve. Takes a bit of time yes. But saves your ass (and time) later.

Many people think they're hot shit because they have dozens of linked sheets and cool toggles and slick iterations. Listen and learn from them but try to do better. One simple way is to take a few days and really learn the underpinnings of VBA (not just Record Macro, but proper from-the-ground-up VBA for Excel). It is worth it. Especially if you have to do some crazy analytics as well. Only 30 minutes a day for a couple of weeks will pay off quickly. Plus, in the scheme of things, you'll be a stud (or, studette? i'm not gonna say "filly" just not gonna).

OK. Now to the topic at hand. Just build out the add-on as if it is a separate company on a separate tab. Link the capital structure in those parts that matter (if you've taken on separate debt secured by separate assets (rare) or if you have another layer of capital specific to that piece, you can keep 'em separated). Where you have synergies lay out the segments of synergies (esp. if you've sold the deal internally and to bankers on that basis) whether they be revenue (by relevant segment/category) or any aspect of costs.

Another tab can bring it all together on a proforma and continuing consolidated basis, of course.

Once everything ACTUALLY consolidates over to a single reporting system (like in the real world, not in your model) you may lose your granular insight into Parent Company and Bolt-On. It happens. Don't fight that (or set up different account codes and shit), it's what you should want even if you lose information. There are proxy ways to get most of what you want when that happens. But that's a post for another day.

 

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