General Leveraged Buyout Model (Excel XLSX)

Create up to a 15-year financial projection for any business acquisition that uses debt and equity. The assumptions are not industry-specific, but rather top-down for revenues, receivables, payables and cost of goods sold. Fixed costs are bottom-up.

The purpose of this template is to plan out a leveraged buyout of a target company, forecast the expected acquisition costs, revenues / expenses / cash flow, and potential future exit.

Leveraged Buyout (LBO) models are instrumental in the finance realm, predominantly for evaluating and facilitating private equity transactions. These models offer an in-depth analysis of potential acquisitions heavily reliant on debt, or leverage. It assists buyers in grasping potential investment returns and risks.

This template evaluates if the target company can withstand a particular leverage level, delivering a return on investment over a potential 15-year span. The primary metric sought from this model is the least equity required. This is determined by considering factors like the initial purchase price (equity component), capital expenditures, upfront costs, and early operational expenses. These elements are adaptable based on changing assumptions.


Template Highlights:

Duration: Forecasts up to 15 years of activity.

Financial Statements: Provides monthly and annual projections for Income Statement, Balance Sheet, and Cash Flow Statement.

Features: Incorporates inventory, payables, receivables, an Annual Executive Summary, monthly/annual pro forma details, and a Capitalization Table.

Assumptions: Allows flexibility in determining acquisition timing, revenue onset, operational expense items, and concluding month.

Analytics: Offers IRR sensitivity analysis based on diverse purchase prices and leverage rates. Additional outputs include DCF Analysis, equity multiple, ROI, IRR comparisons, and project-driven monthly IRR.

Visual Aids: Features visuals such as Debt Service Coverage Ratio and a chart contrasting EBITDA with Debt Service for easier comprehension.

Acquisition Assumptions: Various methods to determine the target company's acquisition price and how the acquisition is financed.

Operational Assumptions: Allows revenue forecasts from four methods, variable cost predictions, and fixed cost projections.

Capital Expenditures: Accounts for new asset acquisitions or capital infusions.

Startup Expenditures: Records initial one-off costs.

Exit Strategy: Describes the exit value components and their implications.

Investor Overview: Presents details about inside and outside investors, their profit share, contributions, and distributions.

Tax Considerations: Simulates quarterly tax payments based on accrued amounts.


Why is an LBO Model Important?

Return Insights: Helps users discern the potential internal rate of return (IRR) on equity investments.

Debt Management: Outlines the company's strategy for addressing its debt over time.

Scenario Assessment: Sensitivity tables demonstrate how varying assumptions can sway potential returns.

Financial Planning: Tests various financial structures to identify the ideal balance of debt and equity.

Exit Strategy: Aids in plotting an exit after a set period.

Operational Enhancements: Helps quantify the return impact of operational improvements.