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    Assumptions:: Simple LBO Model - Key Drivers and Rules of Thumb

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    w_fib
    This document outlines the key assumptions and projections for a leveraged buyout (LBO) model, including: 1) The company will be purchased for $1,050 million, with 50% debt financing of $525 million and equity contribution of $525 million. 2) Over 5 years, the company is projected to grow revenue at 10% annually and EBITDA at 40% margins, with free cash flow used to pay down debt. 3) By year 5, the debt balance will be $341 million, allowing equity investors to exit with proceeds of $1,451 million, yielding a 2.8x money-on-money multiple and 22.5% internal rate of return

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    Assumptions:: Simple LBO Model - Key Drivers and Rules of Thumb

    Uploaded by

    w_fib
    83 views2 pages
    This document outlines the key assumptions and projections for a leveraged buyout (LBO) model, including: 1) The company will be purchased for $1,050 million, with 50% debt financing of $525 million and equity contribution of $525 million. 2) Over 5 years, the company is projected to grow revenue at 10% annually and EBITDA at 40% margins, with free cash flow used to pay down debt. 3) By year 5, the debt balance will be $341 million, allowing equity investors to exit with proceeds of $1,451 million, yielding a 2.8x money-on-money multiple and 22.5% internal rate of return

    Original Description:

    Modello LBO con debito esistente

    Original Title

    109 14 LBO Model Existing Debt

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    This document outlines the key assumptions and projections for a leveraged buyout (LBO) model, including: 1) The company will be purchased for $1,050 million, with 50% debt financing of $525 million and equity contribution of $525 million. 2) Over 5 years, the company is projected to grow revenue at 10% annually and EBITDA at 40% margins, with free cash flow used to pay down debt. 3) By year 5, the debt balance will be $341 million, allowing equity investors to exit with proceeds of $1,451 million, yielding a 2.8x money-on-money multiple and 22.5% internal rate of return

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    83 views2 pages

    Assumptions:: Simple LBO Model - Key Drivers and Rules of Thumb

    Uploaded by

    w_fib
    This document outlines the key assumptions and projections for a leveraged buyout (LBO) model, including: 1) The company will be purchased for $1,050 million, with 50% debt financing of $525 million and equity contribution of $525 million. 2) Over 5 years, the company is projected to grow revenue at 10% annually and EBITDA at 40% margins, with free cash flow used to pay down debt. 3) By year 5, the debt balance will be $341 million, allowing equity investors to exit with proceeds of $1,451 million, yielding a 2.8x money-on-money multiple and 22.5% internal rate of return

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
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    Simple LBO Model - Key Drivers and Rules of Thumb

    ($ in Millions)

    Assumptions:

    (+) Company's Existing Equity: $ 520 Call Premium on Existing Debt: 110.0%
    (+) Company's Existing Debt: 500
    (+) Call Premium on Debt: 50 Existing Debt / EBITDA: 5.0 x
    (-) Company's Existing Cash: (20) Implied EBITDA Purchase Multiple: 10.5 x
    Purchase Enterprise Value: $ 1,050

    Purchase Price: $ 1,050 EBITDA Exit Multiple: 11.0 x


    % Debt: 50.0%
    Debt Used: 525 Year 0 Revenue: $ 250
    Equity Contribution: 525 Annual Revenue Growth Rate: 10.0%
    Annual EBITDA Margin: 40.0%
    Initial Cash Balance: $ 20
    Interest Rate: 10.0% D&A % Revenue: 3.0%
    Tax Rate: 40.0% CapEx % Revenue: 4.5%
    Change in WC % Change in Revenue: (15.0%)
    Income Statement: Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
    Revenue: $ 250 $ 275 $ 303 $ 333 $ 366 $ 403

    EBITDA: 100 110 121 133 146 161

    (-) Depreciation & Amortization: (8) (9) (10) (11) (12)


    (-) Interest: (53) (50) (48) (44) (39)

    Pre-Tax Income: 49 62 76 92 109


    (-) Taxes: (20) (25) (30) (37) (44)
    Net Income: $ 30 $ 37 $ 45 $ 55 $ 66

    Cash Flow Projections: Year 0 Year 1 Year 2 Year 3 Year 4 Year 5

    Net Income: $ 30 $ 37 $ 45 $ 55 $ 66

    (+) Depreciation & Amortization: 8 9 10 11 12


    (+/-) Change in Working Capital: (4) (4) (5) (5) (5)
    (-) CapEx: (12) (14) (15) (16) (18)

    Free Cash Flow: 22 28 36 44 54


    Cash Flow Used for Debt Repayment: 22 28 36 44 54

    Debt Balance: 525 503 475 439 395 341


    Cash Balance: 20 20 20 20 20 20

    Returns Attribution Analysis: Exit Calculations:


    EBITDA Growth: $ 641 Exit Enterprise Value: $ 1,772
    Multiple Expansion: 81 (-) Debt: (341)
    Debt Paydown and Cash Generation: 204 (+) Cash: 20
    Return to Equity Investors: $ 926 Equity Proceeds: $ 1,451

    Money-on-Money (MoM) Multiple: 2.8 x


    Internal Rate of Return (IRR): 22.5%

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