LBO Model Questions and Answers- Basic
Walk me through a basic LBO model.
Why would you use leverage when buying a company?
What variables impact an LBO model the most?
How do you pick purchase multiples and exit multiples in an LBO model?
What is an "ideal" candidate for an LBO?
How do you use an LBO model to value a company, and why do we sometimes say that it sets
the "floor valuation" for the company?
Give an example of a "real-life" LBO.
Can you explain how the Balance Sheet is adjusted in an LBO model?
Why are Goodwill & Other Intangibles created in an LBO?
We saw that a strategic acquirer will usually prefer to pay for another company in cash - if that's
the case, why would a PE firm want to use debt in an LBO?
Do you need to project all 3 statements in an LBO model? Are there any shortcuts?
How would you determine how much debt can be raised in an LBO and how many tranches
there would be?
Walk me through a basic LBO model.
Why would you use leverage when buying a company?
What variables impact an LBO model the most?
How do you pick purchase multiples and exit multiples in an LBO model?
What is an "ideal" candidate for an LBO?
How do you use an LBO model to value a company, and why do we sometimes say that it sets
the "floor valuation" for the company?
Give an example of a "real-life" LBO.
Can you explain how the Balance Sheet is adjusted in an LBO model?
Why are Goodwill & Other Intangibles created in an LBO?
We saw that a strategic acquirer will usually prefer to pay for another company in cash - if that's
the case, why would a PE firm want to use debt in an LBO?
Do you need to project all 3 statements in an LBO model? Are there any shortcuts?
How would you determine how much debt can be raised in an LBO and how many tranches
there would be?
