Overview
Participants build a full three statement LBO model layering in a complex capital structure. The need for two levels of equity ownership is discussed and returns to the equity holders and mezzanine holders are calculated after completion of the fully integrated model.
- 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
- PIK interest
- PIK dividends
- Warrants
- Rollover of existing management equity
- Understanding the need for two types of equity in the capital 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 and mezzanine holders