Leveraged Buyout Model

LEVERAGED BUYOUT MODEL

The acquisition of another company using a significant amount of borrowed money (bonds or

loans) to meet the cost of an acquisition is referred to as a Leveraged Buyout (LBO). A

Leveraged Buyout model is used to determine an implied valuation range for a given target in

a potential LBO sale based on achieving acceptable returns.



Instructions:

Enter the required input values on "Inputs" tab and the assumptions in the "Assumptions" tab

of this workbook. Once the required inputs have been made, the results of the analysis will be

displayed on the "LBO" tab. The model assumes an exit will be made at the end of 5th year

following the sale.









© Copyright 2013 Docstoc Inc. 1

© Copyright 2013 Docstoc Inc. 2

INPUTS



Acquisition Price 940,000





% Debt 60





% Equity 40





Interest Rate 6









© Copyright 2013 Docstoc Inc. 3

ASSUMPTIONS



Year 1 Year 2 Year 3 Year 4 Year 5

Revenue 1,098,000 ####### ####### ####### #######

EBITDA 158,000 175,000 188,000 195,000 204,000

Outstanding Debt 564,000 455,840 324,190 171,642 2,940

Interest Expense 33,840 27,350 19,451 10,299 176

Capex 12,000 12,000 12,000 12,000 12,000

Increase in NWC 4,000 4,000 4,000 4,000 4,000





Cash Available for Amortization 108,160 131,650 152,549 168,701 187,824





Exit EBITDA Multiple 12x









© Copyright 2013 Docstoc Inc. 4

LBO OUTPUT



Cash at End of 5th Year 184,883

Cash from Sell-Off 2,448,000





Tota