15. LBO Modeling

COURSE
Wall Street Prep
5 hrs

15. LBO Modeling

COURSE
Wall Street Prep
5 hrs
OR
Included in GO1 PremiumStarting from $12 per user for teamsLearn moreTry it free
OR
Included in GO1 PremiumStarting from $12 per user for teamsLearn moreTry it free

Course Overview

Leveraged buyout (LBO) modeling is used widely by investment banks and private equity firms and is often part of a finance interview. In this course, you will learn how to build a real, complex LBO model from scratch.  You will start by learning about basic LBO concepts, typical deal structures, and current industry dynamics. You will then begin the step-by-step modeling, covering the most common and challenging issues that emerge when modeling buyouts. The course concludes with a sensitivity and scenario analysis, as well as how to build output tables that are key to any professional-grade LBO analysis.

Instructor - Matan Feldman

Matan Feldman is Wall Street Prep’s Founder and Managing Partner. His responsibilities include business development, development of courses, and overseeing training programs. Matan has overseen training programs for clients including Morgan Stanley, Credit Suisse, Raymond James, Stifel Nicolaus, FBR Capital Markets, Sagent Advisors, Giuliani Capital Advisors, JP Morgan, Cerberus, Wharton Business School, London Business School, Kellogg, Booth, Stern (NYU), and Cornell. Prior to founding Wall Street Prep, Matan served in several capacities on Wall Street — first as an Analyst in Chase Manhattan Bank's Mergers & Acquisitions Group in New York, and subsequently as an Associate within JP Morgan's Equity Research Group, covering Food & Drug Retail Equities.

Learning
CHAPTER 1: LBO BASICS
15.1.1 Welcomevideo • 1 min
15.1.2 Introduction to LBOsvideo • 8 mins
15.1.3 Working Through the Dell LBO on a Cocktail Napkin, Part 1video • 9 mins
15.1.4 Working Through the Dell LBO on a Cocktail Napkin, Part 2video • 6 mins
15.1.5 What makes a good LBO?video • 5 mins
15.1.6 Current LBO Environment, Part 1video • 8 mins
15.1.7 Current LBO Environment, Part 2video • 10 mins
15.1.8 Current LBO Environment, Part 3video • 7 mins
15.1.9 Tax savings in LBOsvideo • 4 mins
15.1.10 Tax Reform Impact, Part 1video • 4 mins
15.1.11 Tax Reform Impact, Part 2video • 5 mins
15.1.12 LBO Capital Structure - Equityvideo • 5 mins
15.1.13 LBO Capital Structure - Debtvideo • 8 mins
15.1.14 Term Loans & the Revolver, Part 1video • 7 mins
15.1.15 Term Loans & the Revolver, Part 2video • 8 mins
15.1.16 Bondsvideo
15.1.17 Covenantsvideo • 5 mins
15.1.18 Mezzanine Financing & Bridge Loansvideo • 4 mins
15.1.19 Extended Dell LBO on a Cocktail Napkin, Part 1video • 3 mins
15.1.20 Extended Dell LBO on a Cocktail Napkin, Part 2video • 7 mins
CHAPTER 2: THE STRUCTURE OF PE FIRMS & INVESTOR DYNAMICS
15.2.1 Dry Powdervideo • 3 mins
15.2.2 How PE Funds Workvideo • 8 mins
15.2.3 GP vs. LP Dynamicsvideo • 6 mins
15.2.4 Tax Reform Impact on the Structure of PE, Part 1video • 6 mins
15.2.5 Tax Reform Impact on the Structure of PE, Part 2video • 5 mins
15.2.6 Whole-Fund vs. Deal-by-deal Distribution Modelvideo • 3 mins
15.2.7 Distribution Waterfall Exercise, Part 1video • 11 mins
15.2.8 Distribution Waterfall Exercise, Part 2video • 4 mins
CHAPTER 3: MODELING A REAL LBO
15.3.1 Case Study Introduction: The Leveraged Buyout of BMCvideo • 6 mins
15.3.2 General Inputsvideo • 6 mins
15.3.3 Initial Valuation: Offer Price vs. Enterprise Valuevideo • 10 mins
15.3.4 Diluted Shares, Part 1video • 13 mins
15.3.5 Diluted Shares, Part 2video • 6 mins
15.3.6 Sources and Uses of Funds, Part 1video • 14 mins
15.3.7 Sources and Uses of Funds, Part 2video • 10 mins
15.3.8 Creating the Historical Income Statementvideo • 14 mins
15.3.9 Forecasting the Income Statement, Part 1video • 8 mins
15.3.10 Forecasting the Income Statement, Part 2video • 9 mins
15.3.11 Forecasting the Income Statement, Part 3video • 4 mins
15.3.12 Forecasting Accounts Receivablevideo • 7 mins
15.3.13 Forecasting Other Working Capital Itemsvideo • 11 mins
15.3.14 Preparing the PP&E Schedulevideo • 11 mins
15.3.15 Preparing the Software Development Costs, Intangibles and Goodwill Schedulesvideo • 10 mins
15.3.16 Forecasting PP&Evideo • 8 mins
15.3.17 Forecasting Software Development Costsvideo • 3 mins
15.3.18 Forecasting Intangibles, Goodwill, Other Assets & Other Liabilitiesvideo • 6 mins
15.3.19 The Cash Flow Statementvideo • 8 mins
15.3.20 Cashvideo
15.3.21 Interest Income and Circularityvideo
15.3.22 Modeling the Revolvervideo
15.3.23 Modeling Required Debt Amortizationvideo
15.3.24 Modeling Cash Sweepsvideo
15.3.25 Modeling the Revolver Borrowing Base Compliancevideo
15.3.26 Modeling PIK Debt & Preferredsvideo
15.3.27 Capitalized Financing Feesvideo
15.3.28 Modeling Interest Expensesvideo
15.3.29 Completing the IS and CFSvideo
CHAPTER 4: LBO EXIT & RETURNS ANALYSIS
15.4.1 Model Review and Introduction to Exit Analysisvideo
15.4.2 Enterprise Value at Various Exit Multiplesvideo • 8 mins
15.4.3 Exit Equity to Sponsors & Management, Equity Kickers to Mezzvideo • 8 mins
15.4.4 Returns to Senior Debtvideo • 9 mins
15.4.5 Returns to Sub Debtvideo • 6 mins
15.4.6 Modeling IRRs and Cash-on-Cash Returnsvideo • 4 mins
15.4.7 Creating an LBO Summary Tablevideo • 7 mins
CHAPTER 5: SENSITIVITY ANALYSIS
15.5.1 Modeling Hurdle Rate Sensitivityvideo • 12 mins
15.5.2 IRR Sensitivity to Leverage and Valuationvideo • 8 mins
15.5.3 IRR Sensitivity to Mezz Debt Termsvideo • 12 mins
15.5.4 Modeling Reviewvideo • 14 mins
CHAPTER 6: PRO FORMA BALANCE SHEET ADJUSTMENTS
15.6.1 Setting up the Historical Balance Sheetvideo • 7 mins
15.6.2 Adjusting the Balance Sheet to Reflect the LBOvideo • 12 mins
15.6.3 Modeling LBO Goodwill and a Recap Togglevideo • 4 mins
15.6.4 Pro Forma Balance Sheet (PFBS) Historicalsvideo • 3 mins
15.6.5 Forecasting PFBS Assetsvideo • 5 mins
15.6.6 Forecasting PFBS Liabilities and Equityvideo • 12 mins
15.6.7 Post-2015 financing fee rules in LBO modelsvideo • 13 mins
15.6.8 Goodbyevideo • 1 min
APPENDIX I: DIVIDEND RECAPS
15. Appendix I.I Understanding BMC's Dividend Recapvideo • 5 mins
15. Appendix I.II Adjusting the Model for BMC's Dividend Recap and PIK Toggle Sub Debtvideo • 4 mins
15. Appendix I.III Alarm Over Dividend Recapsvideo • 4 mins
APPENDIX II: ADVANCED PURCHASE PRICE ALLOCATION MODELING
15. Appendix II.I Modeling Asset Write Upsvideo • 8 mins
15. Appendix II.II Asset Sale (338)/Stock Sale Toggle and DTLsvideo • 8 mins
15. Appendix II.III Impact on the IS and CFSvideo • 9 mins
15. Appendix II.IV Impact on the Balance Sheetvideo • 6 mins
APPENDIX III: ATTACHING A DCF ANALYSIS TO AN LBO MODEL
15. Appendix III.I Attaching a DCF Analysis to the LBO Modelvideo • 11 mins
APPENDIX IV: KKR LBO OF BMC IN 2018
15. Appendix IV.I What the KKR deal tells us about likely actual IRRsvideo • 11 mins
APPENDIX V: DEBT DEEP DIVE
15. Appendix V.I Leveraged Finance: Debt Deep Divedocument
Supplementary Materials
Course Manualdocument
Ultimate Guide to Debt & Leveraged Financedocument
Simple Dell LBOdocument
PE waterfalldocument
KKR LBO of BMCdocument
Intermediate Dell LBOdocument
Supplementary Materials - Model Templates
01_SourcesUsesValuation-Donedocument
01_SourcesUsesValuation-Emptydocument
02_IS-Donedocument
02_IS-Emptydocument
03_WC-Donedocument
03_WC-Emptydocument
04_LongLivedAssets-Donedocument
04_LongLivedAssets-Emptydocument
05_CFS-Donedocument
05_CFS-Emptydocument
06_Cash-Donedocument
06_Cash-Emptydocument
07_Debt-Donedocument
07_Debt-Emptydocument
8_PIK-Donedocument
8_PIK-Emptydocument
9_Fees-Donedocument
9_Fees-Emptydocument
10_InterestExpense-Donedocument
10_InterestExpense-Emptydocument
11_Exit-Donedocument
11_Exit-Emptydocument
12_Returns-Donedocument
12_Returns-Emptydocument
13_Sensitivity-Donedocument
13_Sensitivity-Emptydocument
14_PFBS-Donedocument
14_PFBS-Emptydocument
15_Div_Recap_PIK_Toggle - Donedocument
15_Div_Recap_PIK_Toggle - Emptydocument
16_Advanced_PPA-Donedocument
16_Advanced_PPA-Emptydocument
LBO Model - BMC shares and financing fee adjusteddocument
LBO Model - BMCdocument
LBO Model - Templatedocument
LBO Model with DCF - BMCdocument
LBO Model with DCF - Templatedocument
Workfile1document
Workfile2document
Workfile3document
Workfile4document
Supplementary Materials - SEC Filings
BMC Merger Proxydocument
BMC Pre LBO 10-Kdocument
BMC Q4 2013 PRdocument
Supplementary Materials - Third Party Articles
2010_High-Yield_Bond_Market_Primerdocument
2014 US Loan Primerdocument
Arch Capital - Mezzanine-Debt-Basic-Explanationdocument
Bain_and_Company_Global_Private_Equity_Report_2014document
Bains 7B Buyoutdocument
BMC 1.625B high yield bonddocument
BMC Acquisition Announcementdocument
BMC Debt Termsdocument
BMC Software sets launch of $4document
Debt Rises in Leveraged Buyouts Despite Warnings - WSJdocument
Deloitte DCM Report June2014document
Divide and Conquerdocument
GPs_vs_LPsdocument
Mezzanine_Finance_Explained_Ian_Giddydocument
PE distributions waterfall Kirklanddocument
PE Firms Dividend Epidemic Intensifies Junk-Debt Alarm - Bloombergdocument
PEI 300 May 2014document
PitchBook_2014_Annual_U.S._PE_Breakdown_Reportdocument
Regulators on Leveraged Lendingdocument
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