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Correct LIBOR floor implementation in model??
I've been seeing a mix of approaches in LBO models when it comes to calculating an all in rate based on a LIBOR spread with a LIBOR floor. Question boils down to: Does the floor represent the minimum base rate or the minimum all in rate? To further clarify, what would be the all in rate in the below...
Paper LBO for IBD SA
I've been working on doing paper LBOs and starting to get the hang of it. I'm curious how detailed/complex the ones I'll be given interviews will be. Most of the practice LBOs I've worked on have pretty standard straight-line depreciation, as a flat rate or percent, round numbers (ex: 100M EBITDA...
IRR decomposition / Attribution in LBO
Dear all, I am currently finishing an LBO model and included an overview of value creation in terms of MOIC (equity value bridge incl. ebitda growth, multiple expansion, debt paydown etc.). So far so good. However, I am getting stuck at the following and would love to hear your input: I am trying to...
Anyone want to help me on my LBO? Balance sheet not matching
Hey guys, i have to do an investment comitee paper for my thesis, its a group work and one guy just quit 10 days before delivery. I'm trying to understand why the BS doesn't balance but sadly i wasn't the one doing the LBO from scratch so it's becoming more complicated, if any of you guys can see...
Acquisitions by MGMT company vs acquisitions by funds
Hi Everybody, KKR recently acquired a remaining stake in Global Atlantic. It seems to me that the acquisition was led by the management company and not one of their funds. I am curious to understand whether it is common for PE management companies to acquire other companies, especially in other...
Adevinta's $15 billion take-private
Saw that it's the largest tech take-private of the year. Blackstone / Permira's offer implies a 21x EBITDA multiple, but I'm not very familiar with tech LBOs that aren't enterprise SaaS. Seems like a slow growth business but solid margins. Wondering if it means anything for sponsor / tech LBO...
LBO Help Needed!!!! Can COMP! Stub Period?
Hi ran into a LBO problem on stub period. everything is normal except the closing transaction date is Sep2023 instead of Dec2023. We have 2021FY, 2022FY, Sep2023 BS / IS / CF Q1. when we do premium allocation, do we just go straight to Sep2023 BS and get Sep2023 Pro Forma? Q2. Once we get the...
Tikehau Capital - London info?
Hey guys, any insights on Tikehau's Private Equity and Credit teams in London? Culture, reputation, comp , work-life balance...? Not much clear info on WSO about them. Heard they pay badly, but can anyone confirm the rest?
simple LBO question: taxes and interest expense?
hi team... i am confused. scenario below: Tax rate = 40% EBIT = $150 Interest expense = $100 Every template LBO model I see would calculate taxes by taking $150 - 100 = $50 * 40%... However, I am also seeing online that interest expense is not fully tax deductible... that there is a 30% limit of...
LBO of private company with management reinvestment with a lot of cash on B/S - help needed
Dear community, I would appreciate your advice on the following. I am analyzing an LBO of a private company and am getting a bit confused regarding management reinvestment / rollover. Assumptions: 1M EBITDA, 10x multiple, no debt on B/S, 2M cash on B/S pre-transaction Hence, 10M EV and 12M Equity...
How to do quarter by quarter LBO
Hi, I'm a non-traditional candidate practicing various LBOs in preparation for my PE interviews. My question is -- if a case gives me financial statements of the target on a quarter by quarter basis, how am I expected to build the LBO -- on a quarter by quarter basis or a yearly basis? Any resources...
Worst LBO in past 10 years?
Hey guys, I'm doing a project for my school, and we were asked to analyze an LBO in the past 10 years that was over 1B. I really want to find a unique bad one to analyze because it seems more fun. A quick google search doesn't do me too much good. Any ideas?
Returns attribution calculation - LBO
Hi there, I have the following formulas (taken from WSP) to calculate the return attribution in an LBO: Debt paydown: Final debt balance - initial debt balance EBITDA growth: (Final EBITDA - Initial EBITDA) * Purchase multiple Multiple expansion: (Exit multiple - entry multiple) * Exit EBITDA I...
CF in LBO vs CF in DCF
Can someone please explain to me what is the difference between unlevered free CF in a DCF and unlevered free cash flow in a LBO? I would be very appreciated. Thank you!
Unlevered FCF Question
Hi Monkeys, Quick question. When calculating UFCF and UFCF yield, you obviously back out financing impact. My question is, if debt is used to fund M&A, do you also back out EBITDA associated from M&A? In my experience, several sponsors don't, so cashflow impact of debt is ignored but the benefit of...
Can PE Justify Buyout Deals in the Current Market?
Hi Monkeys, Long-time lurker here and currently thinking about PE recruitment. This got me wondering about how PE are thinking in the current deal / macro environment. There are a few interesting factors at play: Valuations low and potentially set to decline further Interest rates up roughly 5% over...
Asset-Light/Virtual Buyouts
Hi everyone - I'm a novice in regards to PE as an incoming IB SA but I have a question surrounding buyouts post-pandemic. Since we have discovered that many businesses can operate remotely and that many employees prefer WFH flexibility, are there any PE firms that have specialized in acquiring...
LBO Model Question - Debt Schedule Cash Sweep
In an LBO, we typically assume a 100% cash sweep to reduce future interest expense. Why is this not dividend out to shareholders yearly instead? Cost of equity > cost of debt - so logically we should dividend this out?
RE Model - Cash Sweep
I noted in RE models cash sweep doesn't apply (as compared to normal LBO models). Any explaination to why is this is the case?
Private Equity LBO vs Real Estate LBO
What are the main differences between both models?
Debt Schedule in RE
Compared to a typical LBO where excess cash is used to paydown debt during the hold period, I noticed RE LBO models do not do this. Is a 100% cash sweep not a thing in Real Estate models?
Hotel LBO Model
I have a 1 hour test Hotel LBO modelling coming up Anyone has Hotel LBO models and is willing to share? I have some PE case studies and can trade. Do let me know
LBO Model - effective date vs closing date
Trying to get my head around a problem and unable to source a real solution. In a modelling test scenario, what is the best way to tackle a question where you are given a both the actual closing date and a transaction reference date (the reference date being the most recent FYE for the business). So...
Debt repayment in LBO
Hi, I am trying to do an LBO where there is a 5 year exit but the terms for the TLB, RCF and senior notes are 7 years. How do you model this out, would you just ignore the bullet payment meant for year 7, in your 5 year debt schedule? or would total repayment be in year 5 instead?
Preferred Deal Terms / Structuring Practices
Hi, I have been learning about participating preferred stock in preparation for interviews. I am familiar with convertible preferred and participating preferred, but less familiar with "escalating participating preferred." Does this mean that the seniority of the participating preferred escalates by...
General LevFin Discussion
The syndicated loan market is obviously in the shitter and having an existential crisis with the direct lending taking the lead in pretty much all LBO financing for the last 6 months or so. Curious what the LevFin bankers out here are doing given uncertainty? Pivoting to direct lending? Trying for...
Management Options
Monkeys, I had a question on management options. I came across this in a recent modelling test - "Sponsor and Management have agreed a 10% option pool. This will be fully allocated at closing with the option strike price set at original cost" What do they mean by "this will be fully allocated at...
what is management ebitda? same as reported ebitda?
what does "management ebitda" mean? have seen that come up a few times. is that just the same as reported ebitda? and not adjusted ebitda? thanks so much team!!
Private Credit/Direct Lending Deal Comps
Question for anyone in private credit/direct lending - anyone have any recommendations/resources for direct lending deal comps? I think most data sources like LCD pretty much only have the syndicated deals and even looking at preqin/DLD the data seems super inconsistent and incomplete. Trying to get...
LBO question - capital structure
I found the following text in the Rosenbaum/pearl book regarding LBO's: "During the time from which the sponsor acquires the target until its exit (“investment horizon”), cash flow is used primarily to service and repay debt, thereby increasing the equity portion of the capital structure" My...
How much do investment banks really earn in fees from an average sized LBO?
Hi all - could anyone provide some insight into how much investment banks actually generate in fees from an average sized LBO (Think a deal size of c.$2.0bn). I know we would have to take into account underwriting fees, actual advisory fees, closing fees, etc. Thanks in advance!
Credit Suisse now looks like a typical Apollo LBO asset
Extremely cheap business: With poor profitability metrics: But which could be well turned around if unprofitable divisions (e.g. IB) got spin-off and management focused on core business (e.g. Swiss Bank & WM): My thoughts and prayers to the associates who will end up on the deal team though.
How to Complete LBO for Private Company, No Cash Flow Statement?
Relatively new to LBOs so please bear with me! Started practicing on a case where the only financial information in the CIM was a basic financial forecast (think revenue - operating expenses = EBITDA) and detailed calculations on said revenue, operating expenses, and Adj/EBITDA, no balance sheet or...
LBO Value Creation Decomposition - Net Debt or Total Debt Difference
PE folks out there - in decomposing the value creation for debt paydown in an LBO, do you take the difference of net debt or total debt? Does it make a difference?
Would you do a dividend recap or pay down debt with excess FCF?
My guess is debt paydown to reduce interest cost. However, wouldn't paying a dividend boost your IRR a lot more? Thoughts?
An LBO interview question
How to best answer this question in an interview? Thanks! Company has 100 EBITDA in year 0, and is expected to grow EBITDA to 120 in year 5 and decreases debt by 25 each year. Assume the entry multiple is 5x EV/EBITDA and exit multiple is 5.5x. How much additional equity value is created? How much...
What happens during an acquisition?
Please pardon this very elementary question. What exactly happens during an acquisition? (By a PE firm) Does the target company's equity investors get cash? What about when the firm is resold? These are all just random guess-questions. As you can tell, I generally have no clue about what happens and...
LBO Analysis: what does it mean that it provides a "floor" for valuation?
As above, what does it mean when we say that an LBO analysis provides a "floor" for valuation? Does this mean a low "baseline" valuation? If that is the case, how would we "build up" from this floor? Or is the purpose of the floor just to be something along the lines of "this is the lowest valuation...
LBO Model - Help!
Hello All, I'm currently building a cash free debt free LBO model and have a couple bottlenecks I'm hoping to get some help on. Please PM me if you are able to help and I am willing to compensate for a quick session. Thank you!
TAM vs. whitespace opportunity?
hi guys - what exactly is the difference here? is whitespace a subset of TAM? so if TAM is $1B, whitespace might be $100M that's actually serviceable to a Company? from what i understaND, TAM is the total revenue opportunity assuming 100% market share. so is whitespace the portion of that pie that...
learn how to LBO in a day?
Interviewing for a lateral position next week and don't have a ton of experience with LBOs. I know what they are, why they're used, who good candidates of an LBO are, and can do a paper LBO, but I don't have much modeling experience. Is it possible to get proficient at it in a day? If so, do you...
Incoming Summer Analyst looking for advice...
Hello everyone – I just got an offer from a BB to join as a Summer Analyst in 2023 (IBD - Classic). I wanna spend the next year making sure that I know everything necessary to perform well during the internship. What exactly should I be studying? This is what I got so far: Public Comps Modeling...
Temasek Interview - Case Study
Hi all, Have a case study round with Temasek (consumer/tech division) coming up, and I'm wondering if anyone here has had experience with this particular round. From what I gather, they'll most likely give you info on a company, and you need to build a DCF, possibly LBO. Looking to confirm this +...
where to find ARR of public companies?
hi everyone - is ARR listed out somewhere on financial statements for public cos? i only see total revenue. is there a way to look at 10-k, 10q, etc. and figure out ARR if it's not explicitly stated? thanks so much!
Articles / opinions on LBO financing
Hello all, I am writing a thesis on LBO financing and its evolution - trying to understand how it evolved in the last 1-2 decades and how it is likely to be impacted by the current environment of rising interest rates and inflation. I have been using a lot a report from S&P on leveraged loans and I...
LBO: equity value = EV?
hi guys. doing an LBO right now and trying to understand some things. in my example, it seems as though equity purchase price = EV. what about debt, cash? are there some basic mechanics / concepts I'm not understanding here? thank you very much
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
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...
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...
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