Capital Structure (LBO) Modeling
This hands-on course focuses on the skills required to build and incorporate a complex capital structure into a financial model. Participants will recapitalize a company’s balance sheet and then forecast specific pieces of debt and equity so that the model can be used for credit purposes or as a Leveraged Buyout (“LBO”) model.
This course builds on "Building a Financial Model (of a Company)", so participants may want to complete that course prior to taking the "Capital Structure (LBO) Modeling" session.
1 – 2 days, depending on the amount of material to be covered
Incorporate an Acquisition or Financing into a Model
- Build a Sources and Uses schedule within a model
- Incorporate all transaction fees
- Recapitalize a company’s balance sheet
Forecast Debt and Equity
- Properly incorporate Senior Term Debt
- Create a robust bank operating line (or revolving credit facility) with a cash sweep
- Incorporate variable interest rates based on pricing grids
- Calculate a stand-by fee on the undrawn portion of the bank operating line
- Utilize a margining formula to monitor the size of a company’s bank operating line
- Incorporate Mezzanine Debt
- Build a provision for non-cash Payment in Kind (PIK) interest
- Create a well-designed shareholders’ equity schedule
- Properly forecast the company’s balance sheet
- Understand model circularity
- Learn to create a “circular reference breaker” to rid a model of undesirable error messages if the model crashes
Analyze Investor’s Expectations
- Properly calculate the investor’s IRR
- Understand and incorporate operating and debt ratios
- Include ratios with tightening covenants
- Create “flags” if a covenant has been tripped
- Incorporate other advanced analyses to evaluate the transaction from the perspective of the sponsor
Upcoming Capital Structure (LBO) Modeling EventsAll Events
Description This hands‐on course focuses on the skills required to build and incorporate a into a ...
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