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.
8 - 16 hours, 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
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