Paper LBOs

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Couple of questions on paper LBOs - appreciate any insight to the below

  1. I have been through a few guides and it seems there isn't really any consistency between getting to FCFE, with some starting from net income and others going down from EBITDA. Is there any benefits to using one method over another?

  2. Does anyone have any experience in doing Paper LBOs with recruiters? I have had a couple reach out on this but don't really know how it will go given their lack of financial understanding. I imagine if you deviate even slightly from their solution it will be a total mess

  3. Are you usually given a calculator to do the Paper LBO or not?

 

Thanks!

Comments (3)

 
  • Prospect in IB-M&A
Sep 2, 2020 - 9:45am

1)

Be flexible knowing how to build from Net Income or EBITDA or CFO. Make sure you know the different formulas for FCFF (unlevered) vs. FCF (business/ops) vs. FCFE (levered equity).

Knowing all 3 ways helps you with technicals: what happens to EBITDA when DA goes up by $10? Answer is EBITDA remains same but EBIT goes down by $10.

2) 

Most recruiters / HH have worked in the industry before. They should know the variations. They're all the same number at the end of the day.

3)

No, but use the calculator if you can / if it's over phone.

 
  • Prospect in PE - LBOs
Sep 10, 2020 - 1:05am

Maybe I am missing something, but what is the formula for FCF (business/ops)? Thought there was only 2 types of FCF: unlevered and levered

 

Could anyone elaborate on the formula or concept of what she/he is talking about with FCF (business/ops)?

 
Sep 10, 2020 - 1:38am
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