LBO

SMART NB (LBO MODEL) EXAM QUESTIONS AND ANSWERS WITH COMPLETE SOLUTIONS VERIFIED OID original issue discount - difference between face value (or par value) of debt instrument and its issue price - If bond w/ face value = 1000 is issued for 950, OID is 950 Amortization of OID · process of gradually recognizing the OID as interest income (for the lender) or interest expense (for the borrower) over the life of the debt instrument. The amortization is typically done using the effective int...

LBO MODELING COURSE EXAM QUESTIONS AND ANSWERS WITH COMPLETE SOLUTIONS VERIFIED give examples of sources sponsor equity, debt, money from the company's balance sheet, management rollover, revolver, give some examples of uses transaction fees, financing fees, purchasing equity, refinancing debt Why do pe firms keep stock on company's balance sheet after purchase and how much do they usually keep? 3-20% and they do this becuase they can give it to management for hitting targets and r...

LBO MODEL TEST EXAM QUESTIONS AND ANSWERS WITH COMPLETE SOLUTIONS VERIFIED Inputs (Income Statement Inputs) Revenue COGS Gross Profit SG&A Adj. EBITDA Capex Inputs (Income Statement Assumption Inputs) Revenue growth % Gross Margin % SG&A % of Sales Capex % of sales (right side) Projected assumptions Inputs (Balance Sheet Inputs) Assets Accounts receivable inventory other current assets pp&e net other assets liabilities accounts payable other current liabili...

LBO MODEL (BASIC) EXAM QUESTIONS AND ANSWERS WITH COMPLETE SOLUTIONS VERIFIED RATED ++ Walk Me Through a Basic LBO's Mechanics ~Conceptually Flipping a Business: Purchase: w a lot of Debt (Leverage), & Minimal Equity Operate: Use CFs to Pay Interest, Grow & Optimize to Increase Value Sell: Exit at a Higher Valuation "Buy, Build, & Sell" ~Plain & Simple. *Trade On Up To a Larger PE Firm -> IPO One Day **Playing Monopoly, Country Is The Board. Flipping a Home Analogy: Pu...

LBO MODEL QUESTIONS AND ANSWERS WITH VERIFIED COMPLETE SOLUTIONS GRADED A++ LATEST UPDATE How much debt is right to put on a business? How much leverage is put on a typical private equity firm? Generally, you want equity percentage to be around 20 to 40% of total value. The smaller, the equity investment the greater the return. You should ideally be able to pay down all senior and first Leen debt within five years. Total debt is often between 4 to 6 times LTM bit ebitda. What is and h...

INVESTMENT BANKING TECHNICALS - LBO MODELLING EXAM QUESTIONS AND ANSWERS WITH COMPLETE SOLUTIONS VERIFIED LATEST UPDATE What is a Leveraged Buyout? (Technical Explanation) In a leveraged buyout, a private equity firm acquires a company, financing the transaction with a mixture of debt and equity. Typically, the PE firm will want to leverage the deal as much as possible, and will pay the remainder of the purchase price with equity, that typically being their own cash. Once the sponsors gai...

LBO MODEL FUNDAMENTALS EXAM QUESTIONS AND ANSWERS WITH COMPLETE SOLUTIONS VERIFIED GRADED A++ LBO Model A financial model used to evaluate the acquisition of a company using a significant amount of borrowed funds. Sources & Uses section A section in an LBO model that outlines how the transaction is financed and the purpose of the capital, including the required Investor Equity. Goodwill & Other Intangibles Non-physical assets on the Balance Sheet used to balance the equation after adjust...

BIWS LBO AND LBO MODEL GUIDE EXAM QUESTIONS AND ANSWERS WITH COMPLETE SOLUTIONS VERIFIED GRADED A++ Why do we acquire other companies company acquiring believes it will be better of afterward -sellers "asking price:-> lss than the PV of its FCF-> or buyer might expect to realise an IRR on the deal exceeding WACC -less than PV of Future FCF or ROIC>WACC WHy do PE firms acquire companies? difference between PE firm acquisiton and another firm acquistion PE never plans to h...

LBO MODELING KUBICLE EXAM QUESTIONS AND ANSWERS WITH COMPLETE SOLUTIONS VERIFIED GRADED A++ What are the typical fees in a LBO transaction? advisory, debt, and legal & other Advisory fees paid to investment bank for asistance in completing the transaction. Based on a % of the deal size. Lower if banks is representing the seller. Debt fees fees paid to banks, law firms, and other parties involved in issuing debt. Based on % of total debt issued in the transaction Legal & other fees cove...

LBO MODELING | FINANCEABLE EXAM QUESTIONS AND ANSWERS WITH COMPLETE SOLUTIONS VERIFIED GRADED A++ LBO Leveraged buy out - Is an acquisition of a business which a meaningful portion of the purchase price through debt - Executed by PE funds (holding period for 5 years) - Late stage businesses The LBO Process 1. Purchase price (usually EBITDA * Multiple = TEV) 2. Fund the deal 3. Use cash flow to pay down debt 4. Sale of the company (calculate TEV) 5. Pay the lender 6. MOIC (multiple ...