Overview: 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. 

 

Prerequisites: 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.

Learning Topics:

Incorporate an Acquisition or Financing into a Model

- Build a Sources and Uses schedule within a model

- Incorporate all fees incurred with the transaction

- Recapitalize a company’s balance sheet

Forecast Debt and Equity

- Properly incorporate Senior Term Debt with an amortizing repayment schedule

- Create a robust bank operating line (or revolving credit facility) with a cash sweep

- Incorporate variable interest rates in which the spread is dependent on the company’s leverage

- 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 Subordinated High Yield or Mezzanine Debt

- Build a provision for non‐cash Payment in Kind (PIK) interest on various pieces of debt

- Create a well‐designed shareholders’ equity schedule

- Properly link the debt and equity schedules into the financial statements and balance the company’s balance sheet

- Understand the need for circularity within a model

- Make a model iterative by incorporating circular references

- Learn to create a “circular reference breaker” to rid a model of

undesirable error messages when the model crashes

Analyze Investor’s Expectations

- Properly calculate the investor’s internal rate of return

- Understand and incorporate operating and debt ratios

- Include debt ratios in which the covenant tightens each year

- Create “flags” to warn if a debt covenant has been tripped



* Places limites

Please note that a laptop with a full working version of Microsoft Excel is required for this seminar

 

 

JON ZELMAN Principal The Marquee Group Prior to joining The Marquee Group, Jon was an investment banking professional who advised clients on a wide range of transactions and opportunities including mergers and acquisitions, debt and equity financings, restructurings and liability management. Read more...