Overview
Estimated completion: 2.5 hours
This Long-Form LBO Modeling course builds on the fundamentals of LBO valuation learned in Valuation Fundamentals, Valuation Modeling, and the principles of more advanced LBO modeling in Short-Form LBO Modeling. Unlike a short-form LBO model which aims to only answer key questions about returns and capital structure, a long-form model expands outputs to include:
- What returns should all equity holders expect?
- What complex capital structure is possible?
- How are the company’s pro forma financial statements impacted?
In this course, you will learn how to model a long-form LBO using Excel, focusing on adding additional detail to your model when compared with its short-form cousin.
Key concepts covered in this course include:
- Differences between the short-form and long-form LBO
- Sources of capital and associated costs/attributes
- Term loans A, B, and C
- Second lien
- Mezzanine and high yield
- Preferred equity
- Common equity
- Management rollover equity
- PIK interest
- PIK dividends
- Warrants
- Understanding the need for a dual-tier equity structure
- Constructing the opening pro forma balance sheet
- Constructing the projected income statement, balance sheet, and cash flow statement
- Cash sweep with mandatory and accelerated payments
- Calculating returns to equity, mezzanine, and management
Recommended prerequisite courses
Course Content
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