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LBO Modelling Course

Aims

Private equity as an industry use very particular financing structures and the mandates under which they operate give them particular return and investment horizon constraints. The aim of the course is to show delegates how to assess the feasibility of a potential LBO transaction and how to flexibly model the acquisition and leveraging of a company by private equity investors.

Prior attendance on a Practical Financial Modelling course is required.


Objectives

At the end of the course, delegates will:

  • Understand the drivers of leveraged buyout structures and the specific constraints of private equity funds
  • Be able to use comparable transactions as a basis for assessing the feasibility of deals
  • Be able to design and model management incentive structures

Who should attend?

  • Private equity analysts
  • Fund managers
  • Trainee equity analysts
  • Investment professionals
  • Trainee credit analysts
  • New entrants
  • HR and training
  • Finance and accounting

Content

  • Building a transaction sources and uses, avoiding circularity, funding challenges
  • Modelling the pro forma financing structure of the target company
  • Review current leverage market practices and structures – what are the current senior, subordinated loan and bond funding alternatives?
  • Build flexible debt schedules to model a range of sources
  • More complex funding issues – “Cash sweeps” and PIK debt
  • Calculate standard return metrics and flex them using different exit assumptions
  • Management returns – sweet equity, market management compensation practices
  • Measure the contribution of different value drivers to the total return and build a "value bridge"