This course will show delegates how to assess the feasibility of a potential LBO transaction and how to flexibly model the acquisition and leveraging of a company in a private equity led buyout.
During the course delegates will:
- Build a transaction sources and uses
- Overlay a detailed pro forma financing structure on the target company comprising a mix of senior and mezzanine debt
- Review current leverage market practices and structures - what financing is available and on what terms?
- Calculate standard return metrics
- Measure the contribution of different value drivers to the total return
Course Content
Leveraged product and LBO background
- Private equity fund mandates
- Target company growth and cash generation profiles
- Exit routes, exit valuation
- Putting together the financing structure
- Structuring benchmarks
Sources and uses
- Use of funds - share acquisition, debt refinancing, transaction fees
- Sources - scaling senior debt capacity, typical senior debt tranching
- Mezzanine vs. High yield
- Other issues: in-the-money share options, vendor financing
Debt modelling
- Creating reusable facility modules
- Typical amortisation structures of A loans
- Modelling cash sweeps
- Avoiding circularity
- Modelling tax and completing the cash flow
Return hurdles for the funds and credit metrics
- Measuring the key returns - Equity IRR, Cash on Cash Exit multiple
- Tranching equity -loan notes, preference shares
- Analysing value creation
Target Audience
Delegates should have a basic level of excel skills and accounting knowledge. Intermediate and more experienced modellers will still benefit from new techniques to improve their efficiency, speed and flexibility.
