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LBO Model Final Annotations

The document provides an overview of a leveraged buyout (LBO) scenario with detailed financial assumptions, sources and uses of funds, and projected financials over a five-year period. It outlines key metrics such as EBITDA, revenue growth, debt structure, and internal rate of return (IRR) calculations. The analysis includes two distinct LBO transactions with varying entry values and financial structures, highlighting their respective capital structures and performance forecasts.

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Alexhockey2001
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5 views7 pages

LBO Model Final Annotations

The document provides an overview of a leveraged buyout (LBO) scenario with detailed financial assumptions, sources and uses of funds, and projected financials over a five-year period. It outlines key metrics such as EBITDA, revenue growth, debt structure, and internal rate of return (IRR) calculations. The analysis includes two distinct LBO transactions with varying entry values and financial structures, highlighting their respective capital structures and performance forecasts.

Uploaded by

Alexhockey2001
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Quick and Dirty LBO Overview

x Assumptions
Entry ($MM) Financials
LTM EBITDA 125 LTM Financials
EBITDA Multiple 8.5x Revenue 500
Enterprise Value 1,063 EBITDA 100
Existing Net Debt 500 D&A 15
Equity Value 563 Capex 20
NWC 75
Fees & Expenses 16
Operating Assumptions
Exit ($MM) Revenue Growth 5.0%
EBITDA Multiple 8.5x YoY margin expansion 1.0%
Tax Rate 28.0%

x Sources and Uses


Sources Uses
Amount xEBITDA % Capital
Bank Debt 600 6.0x 55.6% Debt Retirement
Senior Notes 250 2.5x 23.2% Equity Payment
Total Debt 850 8.5x 78.8%
Fees and Expenses
Sponsor Equity 229 2.3x 21.2%

Total Sources 1,079 10.8x 100.0% Total Uses

x Financials
Operating Model Year 0 Year 1
Revenue 500 525
% growth 5.0%

EBITDA 100 110


% sales 20.0% 21.0%

EBIT 85 95
% sales 17.0% 18.0%

Interest 48

EBT 47
% sales 9.0%
Taxes 13
% tax rate 28.0%

Net Income 34
% sales 6.4%

x Cash flow Items Year 0 Year 1


D&A 15 16
% sales 3.0% 3.0%

Net Working Capital 75 79


% sales 15.0% 15.0%
Change in Net Working Capital 4

CapEx 20 21
% sales 4.0% 4.0%

x Levered Cash Flow Year 0 Year 1


Net Income 34
D&A 16
CapEx 21
Change in NWC 4
Levered Cash Flow 25

x Debt Schedule
Year 0 Year 1
Bank Debt
Beginning Balance 600
Interest 30
Paydown 25
Ending Balance 600 575

Sr. Notes
Beginning Balance 250
Interest 18
Paydown 0
Ending Balance 250 250

Total Debt
Beginning Balance 850
Interest 48
Paydown 25
Ending Balance 850 825
x IRR
EBITDA at Exit
Exit Multiple
Enterprise Value
Net Debt
Sponsor Equity Value

Sponsor Equity at Entry

MOIC
x IRR
Capital Structure Amount Cost
Bank Debt 6.0x 5.0%
Senior Notes 2.5x 7.0%

For Reference
IRR 25.7%

Amount xEBITDA % Capital


500 5.0x 46.4%
563 5.6x 52.2%

16 0.2x 1.5%

1,079 10.8x 100.0%

Year 2 Year 3 Year 4 Year 5


551 579 608 638 Growth Forecast via Assumptions
5.0% 5.0% 5.0% 5.0%

121 133 146 160 Based on % Sales of EBITDA


22.0% 23.0% 24.0% 25.0% YoY Expansion per Assumption

105 116 128 140 Less: D&A


19.0% 20.0% 21.0% 22.0%

46 45 43 40 Reference to Debt Scheudle

58 71 85 100 Less: Interest Expenses


10.6% 12.3% 14.0% 15.7%
16 20 24 28 Based on Tax rate
28.0% 28.0% 28.0% 28.0%

42 51 61 72 EBT - Tax
7.6% 8.8% 10.1% 11.3%

Year 2 Year 3 Year 4 Year 5


17 17 18 19 Based on % Sales
3.0% 3.0% 3.0% 3.0%

83 87 91 96 Based on % Sales
15.0% 15.0% 15.0% 15.0%
4 4 4 5

22 23 24 26 Based on % Sales
4.0% 4.0% 4.0% 4.0%

Year 2 Year 3 Year 4 Year 5


42 51 61 72
17 17 18 19 Non-Cash item
22 23 24 26
4 4 4 5
33 41 51 61 Levered Cash Flow = Net Income + D&A - CapEX - Change in NWC

Year 2 Year 3 Year 4 Year 5

575 543 501 450


29 27 25 23 As per Bank Debt Cost Assumption
33 41 51 61 Refence to Levered Cash Flow
543 501 450 389 Difference

250 250 250 250


18 18 18 18 As per Senior Notes Cost Assumption
0 0 0 0 Paydown scheudeld after bank debt paydown
250 250 250 250 Sum

825 793 751 700


46 45 43 40
33 41 51 61
793 751 700 639
160
8.5x
1,356
639
717

229

3.1x Exit vs. Entry


25.7% IRR = MOIC * (1 / 5) - 1 ; Holding Period is 5 yrs
Quick and Dirty LBO Overview - Wibit Type Transaction
x Assumptions
Entry ($MM) Financials Capital Structure Amount Cost
LTM EBITDA 2.4 LTM Financials Bank Debt 2.4x 5.0%
EBITDA Multiple 8.0x Revenue 12 Senior Notes 1.3x 7.0%
Enterprise Value 19 EBITDA 2.4
Existing Net Debt 8 D&A 0.36 For Reference
Equity Value 11 Capex 0.48 IRR 24.3%
NWC 1.8
Fees & Expenses 0.384
Operating Assumptions
Exit ($MM) Revenue Growth 6.5%
EBITDA Multiple 8.0x YoY margin expansion 1.0%
Tax Rate 28.0%

x Sources and Uses


Sources Uses
Amount xEBITDA % Capital Amount xEBITDA % Capital
Bank Debt 6 2.4x 29.4% Debt Retirement 8 3.3x 40.8%
Senior Notes 3 1.3x 15.9% Equity Payment 11 4.7x 57.2%
Total Debt 9 3.7x 45.3%
Fees and Expenses 0 0.2x 2.0%
Sponsor Equity 11 4.5x 54.7%

Total Sources 20 8.2x 100.0% Total Uses 20 8.2x 100.0%

x Financials
Operating Model Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
Revenue 12 13 14 14 15 16
% growth 6.5% 6.5% 6.5% 6.5% 6.5%

EBITDA 2 3 3 3 4 4
% sales 20.0% 21.0% 22.0% 23.0% 24.0% 25.0%

EBIT 2 2 3 3 3 4
% sales 17.0% 18.0% 19.0% 20.0% 21.0% 22.0%

Interest 1 0 0 0 0

EBT 2 2 3 3 3
% sales 14.0% 15.7% 17.3% 19.0% 20.6%

Taxes 1 1 1 1 1
% tax rate 28.0% 28.0% 28.0% 28.0% 28.0%

Net Income 1 2 2 2 2
% sales 10.1% 11.3% 12.5% 13.7% 14.9%

x Cash flow Items Year 0 Year 1 Year 2 Year 3 Year 4 Year 5


D&A 0 0 0 0 0 0
% sales 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%

Net Working Capital 2 2 2 2 2 2


% sales 15.0% 15.0% 15.0% 15.0% 15.0% 15.0%
Change in Net Working Capital 0 0 0 0 0

CapEx 0 1 1 1 1 1
% sales 4.0% 4.0% 4.0% 4.0% 4.0% 4.0%

x Levered Cash Flow Year 0 Year 1 Year 2 Year 3 Year 4 Year 5


Net Income 1 2 2 2 2
D&A 0 0 0 0 0
CapEx 1 1 1 1 1
Change in NWC 0 0 0 0 0
Levered Cash Flow 1 1 2 2 2

x Debt Schedule
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
Bank Debt
Beginning Balance 6 5 3 2 0
Interest 0 0 0 0 0
Paydown 1 1 2 2 0
Ending Balance 6 5 3 2 0 -

Sr. Notes
Beginning Balance 3 3 3 3 3
Interest 0 0 0 0 0
Paydown 0 0 0 0 2
Ending Balance 3 3 3 3 3 1

Total Debt
Beginning Balance 9 8 7 5 3
Interest 1 0 0 0 0
Paydown 1 1 2 2 2
Ending Balance 9 8 7 5 3 1

x IRR
EBITDA at Exit 4
Exit Multiple 8.0x
Enterprise Value 33
Net Debt 1
Sponsor Equity Value 32

Sponsor Equity at Entry 11

MOIC 3.0x
x IRR 24.3%

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