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LBO Structuring and Modeling in Practice - Case

The document provides guidance for a case study assignment on modeling an LBO transaction. Students are instructed to build an LBO model for the target company Exoll using realistic assumptions. They should present the target's balance sheet in an "economic format" and include scenarios for tender offers where over 95% of shares are obtained and other scenarios below this threshold. Students should be prepared to discuss and modify their assumptions. Their final output should be 13-15 pages including a 1-page summary, 3 financial statements for target/holding/consolidated, and calculations of key ratios, IRR, and value creation.

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Zexi WU
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709 views11 pages

LBO Structuring and Modeling in Practice - Case

The document provides guidance for a case study assignment on modeling an LBO transaction. Students are instructed to build an LBO model for the target company Exoll using realistic assumptions. They should present the target's balance sheet in an "economic format" and include scenarios for tender offers where over 95% of shares are obtained and other scenarios below this threshold. Students should be prepared to discuss and modify their assumptions. Their final output should be 13-15 pages including a 1-page summary, 3 financial statements for target/holding/consolidated, and calculations of key ratios, IRR, and value creation.

Uploaded by

Zexi WU
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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LBO in practice: structuring and modeling – Case and teams schedule

Marc-Elie Bernard

Academic Year 2015/16

Marc-Elie Bernard – HEC 2015/16 1


(Final) case

• Your Managing Director calls you in: “here are the historical data for Exoll,
please prepare a LBO model that you’ll walk me through first thing tomorrow
morning.
• I would like you to present the Target’s balance sheet in an “economic format”
showing:
– ‘uses’ on one side (assets + WCR)
– and ‘resources’ on the other side (Equity + Reserves + Net debt)
• The Target is one single business entity, a French S.A.
• Oh, also, as you will understand, Exoll is listed on Euronext, so it will be a
tender offer. Please include in your model scenarios in which we reach 95% or
above – and other scenarios below this threshold.”

Marc-Elie Bernard – HEC 2015/16 2


Marc-Elie Bernard – HEC 2015/16 3
Marc-Elie Bernard – HEC 2015/16 4
Guidance
• The case objective is to test you on the LBO modeling, not on your ability to
create a business plan, so please use “realistic” assumptions, i.e. likely and
reasonable:
– your assumptions must allow you to build a LBO model that “flows”…
– … so, for example, please do not create a business plan with a 100% p.a.
top-line growth that does not consume cash.
– in summary: for the projections, use your best judgment (a very important
quality for an investor… or any manager). The same goes for the EV!

• Be ready to be challenged on your assumptions, to be asked to change some


parameters (yes, ‘live’ in the classroom).

Marc-Elie Bernard – HEC 2015/16 5


Guidance (cont’d)
• Please bring:
– your model in electronic version, and
– 5 print-outs.
– You have the option, if you think this would be more efficient and help
clarify your work (but this is just a suggestion and in no way a requirement),
to put together a PowerPoint presentation (i) showing the model (with
assumptions and results) and (ii) explaining how it is constructed and how it
works.
• Your final output: 13-15 pages
– 1-page summary (you figure out what it should include!)
– 9 pages (3 financial statements for target, holding, consolidated)
– (you can add detailed pages for financing assumptions / debt schedules /
mezzanine / etc.)
– Key ratios
– IRR calculation(s)
– Value creation
Marc-Elie Bernard – HEC 2015/16 6
IMPORTANT WARNING
• I Am fully aware that you were distributed examples of LBO models in other
classes.

• DO NOT REUSE THEM!


– the objective of the final class is that you create a model from scratch.
You will not gain all benefits from the exercise if you go the lazy way.
– groups that have done so in the past have consistently missed important
steps in the process as these other examples are not based on models
coming from PE firms, but rather from investment or commercial banks.

Marc-Elie Bernard – HEC 2015/16 7


Teams summary

• Monday, April 4, 2016 – 8:00 to 10:00


KKR ALAKBAROV Ayaz
ANGRISANI Matteo
CAVALIERE Riccardo
UMAROVA Yana

Goldman DENIZOT Lukas


Sachs KERJOUAN Erwan
Capital JEBRIL Khalil
Partners PULLMAN Jonathan

Carlyle CODRON Julia


KONIECZNY Pierre
PANDRAUD Ondine
PERRIN Augustin

Marc-Elie Bernard – HEC 2015/16 8


Teams summary

• Monday, April 4, 2016 – 10:00 to 12:00


Texas ARKADYEV Grigory
Pacific AVERIN Stepan
Group MALEON Sylvain
ROCCO Simone

IK Partners GÖBEL Celine


MATHEW George
SCHNEIDER David
STEGMAIER Andreas

Ardian HUANG Yushan


LI Meiying
LIU Huanrui
WU Zexi

Marc-Elie Bernard – HEC 2015/16 9


Teams summary

• Monday, April 4, 2016 – 13:00 to 15:00


CVC Capital BONTEMPS Grégory Michel
Partners FAUQUEX Philippe
VORNDRAN Daniel
SVENSSON Nicholas

Bain FAIGES GIL Marc


Capital IVANOVA Anastasia
MESTRE PIQUET Jordi
MONTANÉ VILANA Xavier

Apax PANARITI Klajd


POIRMEUR Pierre
VELON Romain
ZAKARIA Abdelhamid

Marc-Elie Bernard – HEC 2015/16 10


Teams summary

• Monday, April 4, 2016 – 15:00 to 17:00


BC Partners DE RIDDER Dieter
FLAMMANG Jean
RAINVILLE Christophe
VANDEKERCKHOVE Lawrence

Blackstone JIN Siyi


MACEDO FARIAS André Luís
MAUDONADO BISSOTO Luiz Ricardo
ZYKOVA Evgeniya

Advent Mr CARRIERE Matthieu


Mr DENG Jiejin
Mr HASPESLAGH Willem
Mme RENDAK Polina

Marc-Elie Bernard – HEC 2015/16 11

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