What you'll learn

Learn market practices and structures for leveraged buyout transactions
Understand the drivers of leveraged buyout structures and the specific constraints of private equity funds
Understand the relevance of different funding options -A & B loans, HY bonds, 2nd lien, mezzanine debt
Learn how to build and use an LBO model to assess deal feasibility
Using comparable transactions as a basis, be able to assess the feasibility of a deal
Use the model to calculate standard return metrics (IRR, money multiples) and investigate the operating model using ROCE
Use the model and some leverage comparables to structure an LBO financing

Requirements

Delegates should have some fundamental Excel modelling skills and basic knowledge of financing, but the specifics for an LBO model are fully explained from scratch. If you've not done so, you should have a go at our Financial Modelling program.

Description

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.Delegates will build an integrated LBO model and a value bridge, disaggregating value added/destroyed into the various components, namely – growth, margin improvement, "multiple arbitrage" and fees. We will then use the model and some leverage comparables to structure a bid and also consider a potential competing Unitranche offer from a debt fund.The course is practical and pragmatic: we look at the typical mandates of Private Equity Funds and how that drives the structures of deals – their return

Requirements

, hold periods and exit routes and very importantly, the range of opportunities that this gives to the Bank. We also review and model the full range of funding sources available to borrowers, including products like Unitranche which are a strong competitor for the more "traditional" cash flow lending structures offered by banks through A & B loans.Specifically, we will:Build a transaction sources and uses;Derive a pro forma opening balance sheet;Overlay a detailed pro forma financing structure on the target company comprising a mix of senior and subordinated debt. Specifically, we will model debt with PIK components such as mezzanine debt;Review current leverage market practices and structures – what financing is available and on what terms? Who are the Bank's competitors? What is the significance of the different products: A& B loans, Second lien, HY, Mezzanine and Unitranche?Explain structural and contractual subordination and explain how they are used in creating different classes of debt and indeed how shareholder loans are used to create preferences amongst the different "equity" providers such as "rollover" equity, sweet equity and institutional funding and what, if at all, is the typical role of vendor loan notes.Build an integrated forecasting modelCalculate standard return metrics, IRRs and money multiples and investigate the operating model using RoCE;Measure the contribution of different value drivers to the total return using a "value bridge" calculationUse the model and some leverage comparables to structure a leveraged financing for an LBO.At the end of the course delegates will:Understand the drivers of leveraged buyout structures and the specific constraints of private equity fundsUnderstand the relevance of different funding options -A & B loans,Be able to build and use an LBO model to assess deal feasibilityUsing comparable transactions as a basis, be able to assess the feasibility of a dealAssess management incentive structuresBe able to assess the likely competitive threat from alternative debt providers

Overview

Section 1: Model and Leveraged Finance Intro
Lecture 1 Model build intro
Lecture 2 Private Equity fund mandate
Lecture 3 The LBO Balance Sheet
Lecture 4 Model structure and beginning the build
Lecture 5 Completing the Op Cash Flows
Section 2: Sources and Uses of Funds
Lecture 6 Sources and Uses - part 1
Lecture 7 Sources and Uses - part 2
Lecture 8 Sources and Uses - part 3
Section 3: Debt inputs and schedule
Lecture 9 Debt schedule
Lecture 10 Debt detail with LOOKUP and MATCH
Lecture 11 Debt - balance and repayments modelling
Lecture 12 Calculating repayments using a Nested IF
Lecture 13 The Debt Summary table
Lecture 14 Completing the post-financing and tax cash flow
Section 4: Returns Analysis
Lecture 15 Returns - part 1
Lecture 16 Returns - part 2
Lecture 17 Returns - part 3
Lecture 18 Returns - part 4
Section 5: Returns Decomposition and the Value Bridge
Lecture 19 Decomposition and the Value Bridge - part 1
Lecture 20 Decomposition and the Value Bridge - part 2
New analysts, those moving into a Leveraged finance team or undergrads keen to learn more before embarking on a career in finance.


Homepage:

https://www.udemy.com/course/lbo-modelling/