Disclaimer: This model is for educational and demonstrative purposes only.

LBO Financial Model - Company ABC

📊 Project Overview

This repository contains a comprehensive Leveraged Buyout (LBO) financial model for a hypothetical target company, "ABC".

The model is built in Microsoft Excel and simulates the acquisition of a public company, structuring the financing (debt vs. equity), forecasting operational performance under various scenarios, and projecting returns for the financial sponsor.

📂 File Structure

The model is organized into the following logical components (tabs):

• Intro: Title page.
• Drivers: The control panel for the model. Contains all hard-coded assumptions regarding transaction details, operating scenarios (Revenue, COGS, OpEx), working capital, and macroeconomic factors.
• Valuation: Calculates the entry valuation, including the calculation of Enterprise Value (EV) based on share price, premiums, and net debt.
• Sources & Uses: details how the acquisition will be funded (Debt tranches + Sponsor Equity) and where the capital goes (Purchase price, Refinancing, Fees).
• Debt Schedule: A detailed waterfall calculating interest expense (based on LIBOR curves) and mandatory/discretionary principal repayments for various debt instruments.
• Exit Valuation: (Placeholder) Calculates the exit value and returns analysis (IRR, MoM) at the end of the investment horizon.

🔑 Key Model Assumptions

1. Transaction Details

• Target: ABC (Italian domicile).
• Acquisition Share Price: $150.00.
• Premium: 25% (Implied Offer Price: $187.50).
• Implied Entry Multiple: ~13.0x EV/EBITDA.
• LBO Date: December 31, 2022.

2. Financing Structure (Sources of Funds)

The deal is highly leveraged, utilizing a mix of debt instruments to minimize equity contribution:

• Senior Notes: $40,000 (Bullet repayment in Year 7).
• Term Loan A: $60,000 (High amortization: 10% per annum).
• Term Loan B: $60,000 (Low amortization: 5% per annum).
• Sponsor Equity: ~$43,519 (balancing figure).

3. Debt Logic

• Interest Rates: Modeled using a floating rate structure (LIBOR + Spread).
  • Senior Note: LIBOR + 3.0%
  • Term A: LIBOR + 3.5%
  • Term B: LIBOR + 4.0%
  • Revolver: LIBOR + 5.0%
• Cash Sweep: Includes logic for a Minimum Cash Balance ($8,000) to determine excess cash available for debt paydown.

4. Operating Scenarios

The model includes a switch to toggle between three forecast scenarios regarding Revenue Growth, Margins, and Working Capital efficiency:

1. Optimistic Case
2. Base Case (Current Selection)
3. Worst Case

🚀 How to Use

1. Select Scenario: Go to the Drivers tab and change the cell under "Scenario" (Values 1, 2, or 3) to see how the debt service capabilities change under stress.
2. Adjust Assumptions: Modify the Acquisition Premium or Leverage amounts in the Sources & Uses to see the impact on the Sponsor's required Equity check.
3. Review Debt Schedule: Check the Debt Schedule tab to visualize the paydown profile of Term Loans A and B over the 10-year forecast period.

🛠 Skills Applied

• Financial Modeling & Valuation.
• LBO Structuring.
• Debt Schedule Construction (Circularities & Waterfalls).
• Scenario Analysis.

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Disclaimer: This model is for educational and demonstrative purposes only.