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LMM PE Analyst Interview
Hey all, I have a 2-on-1 interview with a Lower Middle-Market PE firm tomorrow that will focus on LBO technicals. I am transitioning from MC and was told since I do not have prior direct experience modeling, I should focus on LBO technicals and that they use multiple of EBITDA to forecast rather...
Financial Modelling Debt Sizing
Hi there, I am currently looking to build a LBO financial model with a Term Loan but also put in place an RCF to be drawn if CFADS is negative. The problem is that I would like this RCF to draw debt without outpassing a reference leverage to be respected along the tenor of the financing (5 years),...
LBO Model excercise
Can someone help me fill in the blanks in this modeling exercise?
LBO Modeling Question
Anyone able to help with a quick LBO modeling excercise?
LBO Model Case Study
Hi everyone, Was curious if anyone would be able to help me out with an assigned LBO model. See below for details. Thanks!
LBO Modeling Question
Anyone able to help out with a small LBO model assignment below. No time crunch, just need a little help on the process
financeable EBITDA vs... EBITDA? what is the difference?
hey guys - what's the difference between financeable EBITDA and.... non financeable EBITDA? and what are the differences in the calcs? been reviewing some buyside / LBO / lender model materials and keep seeing this term "financeable ebitda" thanks all!
Financial Modelling - Reinvestment option
Hi there, does anyone has a buy and build financial model (incl. IRR calcs and leverage (note: no leverage at start, but from year 3) where the acquired entities partly reinvest their proceeds? Many thanks in advance and best regards, Wulf
gaap vs. cash ebitda? What?? confused.
if ebitda is a non-gaap metric, why do i sometimes see "gaap vs. cash ebitda"? very confused here. how can there be a "gaap" ebitda? and then what's cash ebitda? thanks team! appreciate all the help
LBO: Net Debt vs Debt in minimum equity
Hi guys, I am doing the "WSO-PE-Guide-Full-LBO-Example-1-vF" exercise and had a question on coming up with the S&U. I'm sure you guys are familiar with this but the prompt said minimum equity of 30% and PIK notes is $450 in the staple financing package and is a plug on Sources. If I were to use...
LBOS and sensitivity tables: easy question
hi team. quick question for all. so for a data table in an LBO, the inputs need to be on the same tab for the data table to run properly. but if someone is trying to bring in an operating model with many tabs to link into the LBO income statement, how can you sensitize around operating model inputs...
LBO offline course
Hello, this is Chad, your typical PE analyst, who is sacrificing life over Excel and Powerpoint. Chad was advised to learn more LBOs to be even more useful and spend more time in Excel. He is a picky guy and likes none of the offered online courses from the long list on how to become a pro in LBOs....
CAGR vs. IRR... # of periods...confused...
Hi team - hope everyone is doing well. for some reason i am a bit confused on the difference between cagr and IRR. the formula seems to be the exact same? for LBO purposes. (final value / beginning value)^(1/#periods) - 1 I'm also confused on the # of periods. For CAGR, 2012 - 2013 would be 1...
LBO Sources & Uses
Hi All, Happy New Year and thanks in advance for reading thru / helping out with my questions below on the LBO S&U line items! I'm new to LBO modeling and sorry if my questions are too basic, but after trying out a few online LBO tests (simple ones for now), I have some confusions around the S&U...
Calculating cost of debt in LBO
Preparing an LBO for a PE firm and wanted to double check my cost of debt rationale. Targeting a 60/40 debt/equity mix Target Co to be acquired with 2 Term Loan B's Term Loan B #1 cost of debt = Libor + (target co interest expense/target co debt) Amortised evenly over life of loan Term Loan B #2...
Help For a Dream Job Case Study
Hey all. I have passed interview number 1/3 for my dream analyst role in corporate finance. The next round is a case study with an IM of 50-70 pages and we have to build a 'very basic LBO model' as well as a 5 slide summary of important points and places of concern etc etc. As I really want the job...
Advanced LBO Model for Buy and Build
Hi there, i am looking for a lbo Model for a Buy and Build case where sellers of the acquired company can reinvest parts of the proceeds in the entire group and as a 2nd option into their own company. The tricky part is how to then only partly let them participate at the full, levered group returns...
LBO Case Study practice
Uploaded an LBO case study practicing for an upcoming opportunity. Not quite sure how to tackle this one cause its so bare. I know im missing something obvious. Appreciate anyone's help.
Goodwill Calculation after LBO - LBO modeling
Hi, Do i add or subtract existing goowdill (target's goodwill) to the new pro forma Goodwill? Thanks in advance.
Warrants rollover
Hi guys, In the source of funds of a transaction I spotted "rollover warrants". A few questions came to mind: 1. Does that capture staff options/esop or do these warrants come purely from management? 2. Is this a cashless exercise or do warrants holders actually transfer cash to the company which is...
PE Case Study Question
Say you own a business doing $7MM in EBITDA and a PE firms offers to give you the following for 80% of your business: - $60MM cash - $7MM earn out paid at the end of year 1 if EBITDA goes up 12% (if hurdle is not met then $0 is earned) - $15MM seller note that will amortize 5 years from the date of...
S&U & Goodwill in LBO paying off Off-BS Debt
Hi all - Working on a deal where we assume all debt, and raise new debt to pay off debt-like items on the BS (with some wiggle room to reduce our equity as new debt > off-BS debt we're paying off). My questions are: 1a) Is my S&U correct (version 1)? 1b) Is my S&U correct (alternative version, my...
LBO Model Question
Some LBO models will reach levered FCF by simply taking unlevered FCF minus the cash interest expense incurred in that year. Isn't that not ideal though because it fails to account for the tax deductibility of interest expense? As in, cash taxes are overstated? Is that method just acknowledged as a...
1-hour LBO modeling test for PE analyst position, what to expect?
I have an upcoming LBO modeling test for a lower middle market PE analyst position. I was told they would email me the info and I would then have an hour to send it back to them. Anyone know what to expect with a time constraint of an hour? 3-statement LBO model or would you expect it to be a...
What to expect and how to practice for a 1-hour LBO modeling test at a lower-middle-market PE firm?
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Best books for advanced LBO modeling?
Hi all. I'm going to be starting as a PE associate shortly. I have a good grasp of modeling / LBO modeling, but want to hit the ground running and am looking to brush up on any advanced LBO modeling topics that could actually come up on the job. Are there any good books or other resources that would...
LBO Modeling Best Practice
Hi all, As I am practicing LBO modeling I wanted to discuss with you any best practices to avoid practicing wrong / not optimal stuff. If I start an LBO from scratch in a modeling test, I would go along the following way 1) Setting up the Business Plan (Historicals + forecasts) 2) Transaction...
Looking for a financial modeling coach
Hi Everyone, I would like someone with industry experience to help coach me with completing an LBO / DCF model from a CIM. I have the case study handy and would like to have some guidance and 1:1 session help with questions. Please feel free to PM me.
Price paid vs use/source of funds
Hi, I am a bit confused. Say you want to acquire a company and that you value it at $50m (5x LTM revenue, the EV correct?) which has $10m of debt and $5m in cash. The TEV is $50m, the Equity Price is $45m. Would the purchaser pay the TEV or the Equity price? What are the implications? To add to my...
Modeling question: revolver cap
Quick question for modeling pros: what happens when FCF remains negative, we keep drawing on the revolver and it reaches a revolver commitment cap? For the sake of the model, do we keep drawing on the revolver but highlight that availability has reached 0? My hunch is that if you cap the amount...
LBO Modeling question (Revolver, circularity, etc)
Hi for 1-4hour long LBO Modeling I have following questions. 1) Do you I necessarily have to calculate interest expense by averaging beginning and ending debt balance? Or is it okay to calculate it with beginning balance only for the purpose of testing? 2) For calculating Revolver, do I always have...
LBO Question - Please Help!
How would you go about answering / modeling the following? A fund will target 15% equity returns assuming exit in year 5 to an 8% WACC investor. I'm given the total debt quantum and the debt mechanics but feel pretty stuck...
PIPE (Private Investment in Public Equity) Modeling Question
People, Can you help me with the situation below? Situation - PIPE investment by Fund A in Company B - Company B Mkt Cap @ Transaction: $1 bn - Company B Shareholders' Structure @ Transaction: 45% Controlling & 55% Free Float - Company B Total Debt @ Transaction: $700 mm - Company B Cash @...
PE Fundraising process/Documents
I have worked in PE as an analyst, then an entrepreneur. I'm a partner in several SaaS companies and one SaaS venture builder. We are getting a lot of deal flow from SaaS businesses looking to sell or cash out. We are raising a fund in 2021 to offer both buyouts and revenue sharing to these...
LBO Modelling Test
Hi everyone, I have a LBO modelling test coming up next week, and I have been studying as much as possible using online courses/training materials. I however noticed that all the materials are based on LBO transactions completed in the past, i.e. we know the purchase price and new debt issued. The...
Valuation Football Field
When summarizing valuation findings in a football field, how do you derive the 'range' that you include for each valuation method. For my DCF, I performed a sensitivity analysis that gives me a nice range, but I'm not sure how to get a range for comparable companies analysis, precedent transaction...
Using complex excel function in financial modelling (Accounting, M&A, LBO, Valuation)
Hey monkeys, I am training in excel and I was wondering by this question: When do we use for instance "index-match" or "sum-product function" in financial statements, DCF, LBO or even a Merger Model. Could you please give some real-life example ? Thanks,
Restaurant/Retail PE Modeling?
Quick question I thought I'd fire out into the forum, I have a interview coming up with a MM mezzanine firm that invests mostly in business services and the restaurants/retail space. I'm pretty much flying blind with respect to modeling for retail and restaurant business. While some of the stuff...
Simplified vs Complex Option Pool
Hi Everyone, I've been going through some LBO models and I am seeing varying ways on how to calculate management options at exit. The two methods I see are either: 1. Excess equity aka exit equity less initial sponsor equity * mgmt option % or 2. Treating the options similar to stock options in TSM...
Management and sellers notes
Hi there. I saw a recent question here where I could not find the answer and was hoping you could help. The transaction is being funded with a 1.0x contingent seller note. this note is assumed to be paid out in full (at exit) if seller meets a certain ebitda target at exit, and is payed out at a...
Why does existing debt not matter in an LBO?
Hi guys, I was looking for an answer to the question why existing debt does not matter in a leverage buyout. I already checked the existing threads, but could not find an answer that helped me. Sorry if I got his wrong: - I always thought when buying the target the base price is the Equity Value...
KEA Model Test Qs - S&T Background
Hi guys, I have recently decided to pursue a role in PE. I am a 1st year associate at a BB (think MS, GS) in a group focused on sales of structured products in EM; not at all similar to M&A or LevFin. I have been approached by several HH because of my experience @BB but, because of my role, I have...
URGENT - NCI in LBO Model
Quick question on LBO modeling. I am running an LBO on a company with a 60% stake in a sizeable JV. I have headline sales, EBITDA, net income forecasts for the JV from brokers. To run the LBO would I strip out the JV financials from my P&L and subtract the net income attributable to other...
Sources & Uses - Cash Free / Debt Free LBO (picture included)
Hi all - Been trying to fully understand the sources & uses of CF/DF LBOs vs. Non-CF/DF LBOs. The picture is an example. Am I approaching this the right way? Thanks.
What would you consider a typical variability in IRR between base and optimistic?
The title says it all -- if you're providing a lot of the assumptions based on a CIM or 10-K and some limited market research, what range of IRR between scenarios would raise the red flags to suggest "this model isn't specific enough" E.g. right now, I'm looking at a 19% IRR in my base case, but...
Can TEV be less than book value of assets? What does this mean?
If you're looking at a company where, based on the EV/EBITDA multiples used, your TEV is less than the book value of assets, what does this mean? In this scenario, I assume it would mean that it's primarily due to a significant intangibles value and some goodwill. What implications might this have...
LBO Modeling from 10K-- can I exclude items from B/S in model to simplify?
I am doing an LBO model based on a 10-K -- My question is generally, what is safe to totally exclude from the model for simplicity's sake? E.g. if the 10K and historical show DTAs, DTLs, unearned revenue, etc., can I just omit those when modeling? And if so, how do I go about doing that? Broadly,...
Best HF Modeling / Case Study Prep
Context: I'm an analyst at a BB starting their second year. I'm trying to recruit to a HF and have had good communications so far with recruiters, quick response rates, and a few potential interviews coming (already completed a first round for one). From a market / idea generation perspective, I've...
Question on the "Dividend Recap"
Would it be possible for a private equity sponsor to issue themselves a dividend with the a portfolio company's excess cash flow, rather than by taking on new debt (assuming they have paid their mandatory amortization on the existing debt)? TLDR; Can a a sponsor do the "dividend" without the...
Pro tips on improving speed for LBO modeling?
I've started to practice paper, basic and full LBO modeling but still struggling to complete the exercises within the time limit I should expect in an interview. Are there general tips to improve on speed when building an LBO model from scratch? Specifically I'm interested in tips around: 1)...
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