[GET] LBO - Leverage Buyout

[mindpower]

LBO - Leverage Buyout
Structure and Financing LBO| Valuation Methods| Financial Modeling Build-up of Revenue| Cost Sheet| Equity Schedule
New
Rating: 0.0 out of 5
(0 ratings)
541 students
3 hours on-demand video

Description
Overview of the LBO

An LBO model of leveraged buyout shows what all takes place when a company is acquired by a private equity firm by using a combination of equity or cash along with debt which is then sold off within a period of 3-5 years. By taking such a step, the aim of the private equity firm is to earn a return of 20 -25 percent which is far in excess of the “historical average annual return” in case of the stock markets. The leveraged buyouts are more or less same to the normal deals of merger and acquisitions; the only difference is that in a leveraged buyout, the assumption is that the buyer will be selling the target in future.

The working of the Concept of Leveraged BuyOut and LBO Model

There exists a similarity between purchasing a house and leveraged buyout as a combination of down payment as well as a mortgage can be made use of. In the case of both these transactions, there is saving of money as a small amount is put down in cash and the remaining is borrowed. In case of the leveraged buyout, the “down payment” is known as the equity or the cash whereas the “mortgage” is known as the debt. The debt is utilised by the private equity firms for boosting its returns. If everything else is equivalent, it means that if the private equity firm makes use of more leverage or debt, the firm is likely to earn a higher rate of return on the investment that has been made by it.

https://www.udemy.com/course/lbo-leverage-buyout/?couponCode=EDUCBA202

Enjoy!