How to Build a Leveraged Buyout (LBO) Model in 5 Steps! (FREE Excel Included)

Thanks @rareliquid

Great tutorial! Thank you so much

Hi Ben, Are you aware of debt beta which is prevalent in the PE domain? If yes, please make a video on it.

Crisp and clear video. Thanks for educating

Honestly the best LBO model tutorial I have ever seen! Can you please do the same for M&A model? Thank you for all your hard work, truly appreciate the content!!!

Great stuff thank you!

where is the free excel here?

Fantastic breakdown 🥸

This is extremely helpful!! Thank you so much!!

Anyone know what mechanical keyboard he uses?

Hi, do you have modeling for private debt /credit? Thanks

Thanks for the model. Would love to see a more detailed one with variable scenarios. Cheers

Thanks for putting this fantastic lecture. Please we want more advanced LBO lectures.

The formula for the Paydown of Tranche B (Sr. Notes) is problematic and should not be used. Although it works for this particular model because Tranche B debt is untouched here, you will end up with negative values when Tranche A is completely paid off within the LBO period. You should use:
=IF(Tranche A ending bal.>0,0,MAX(0,MIN(Levered FCF - Tranche A paydown,Tranche B opening bal)))

Amazing content!!! So easy to understand

why didn't you pay senior debts for first, given they have higher cost in percentage?

yeah but how do you raise money to get this

Hey @rareliquid , I am relatively new to finance and haven't studied it. I saw on most sources that we should always aim to pay off higher-interest debt, so would you mind quickly telling me why the bank debt is being paid off before the senior notes for this specific example? I don't think it affects the theoretical model in this case, but I'm guessing in practice, people would fight over who gets their money first, yes?

In the model you took an assumption of 10× multiple which reflects a hurdle rate of 7%~ required by investors, but you also pointed that the usual hurdle rate (wacc) required by PE is usually 15% , which reflects a 5× multiple. How do you settle the contradiction?

Wouldn’t it make more sense to pay off the debt with the higher interest rate?

When creating the debt schedule: Wouldn't we pay of the Sr. Notes first? Since Seniority Notes take priority?

Is it a good idea to work as a freelancer in finance industry ?

Wouldn’t this create a circularity? Cause the interest expense affects the levered fcf which affects the debt paid down and the interest paid? Or am I tripping?

Please do an accretion dilution video for M&A as well! Thanks for this video ❤

Thanks for these videos ❤

Where do I get this model lol

If we paydown only 49 and so on which is less than total interest payment won't it be a negative sign for banks and will add up penalty to it?

Thanks! for the video but can you also upload a M&A Model soon?

I would like an advanced LBO topics video. Great stuff

Bro please make a more advanced lbo model please 🙏🏼

Slide 5 item 3 should be Multiple on Invested Capital and not Money.

Its my first time watching your video and thanks for the great stuff!!

One question I had was,
whether it is usually the case that the sponsor will have to paydown all of the tranche 1 principal before paying down any of the tranche 2 principal.

Obviously, tranche 1 lender will not want the sponsor to paydown any of tranche 2 before tranche 1 principal is fully paid down,
but I wonder if there are real world cases where sponsors are allowed to pay down at list a portion of tranche 2

This video was super interesting. I am waiting for the next one, thank you.

Got served an IG ad for an LBO tutorial/template behind a pay wall - thanks for posting. Ain't no way I'm spending to unlock

Thank you!

why net borrowing is not included in levered cashflow?

Hi, Can't download the excel. Could you share the link please ?

Hi thanks for always putting out great content. I wanted to ask if you have a real estate valuation course? One that lets you calculate the expected return on a rental purchased?

yes please do more advanced LBO especially with the sesetivity analysis or table

Very useful, Thank you.

Literally the best LBO tutorial on the market! Could you also share one tutorial for project financing and one for real estate sector? Thank you!!

Hi Ben, your videos are always helpful. Please make a advance video with sensitivity table analysis

thanks, really useful!

Appreciate your videos. However, I will give one point of feedback. This makes the PE process seem so simple. I understand there are use cases for a high-level LBO, but think for those looking into this, it would be helpful to at least mention that in general, there is a massive underlying operating model that is leveraged. It isn't just plugging in a margin expansion and revenue growth rate.

M&A model please

why is the net present value of free cash flow not calculated?

Hi Ben! For the next tutorial video could you build a company deck/pitch deck in powerpoint as an investment banker usually does? Thanks!