Capital Structure (LBO) Modeling
Séminaire de formation technique
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
Speaker:
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... |