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

Рет қаралды 154,161

Күн бұрын

In this video, I show you step by step how to build a simple LBO model.
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⏱Timestamps⏱
0:00 - Introduction
0:41 - What is an LBO?
3:45 - Step 1
6:27 - Step 2
11:42 - Step 3
18:53 - Step 4
26:17 - Step 5
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
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All content in this video is for entertainment purposes only. I am not a professional financial advisor and my statements are not to be taken as instructions or directions. In addition, some of the links above are affiliate links, meaning that at no additional cost to you, I may earn a commission if you click through and make a purchase.

Пікірлер: 133

@rareliquid Жыл бұрын

If you're interested in the Wall Street Prep + Wharton Private Equity online certification program, be sure to use my code RARELIQUID for a $300-500 discount! ► New cohorts are constantly opening up so you can use code RARELIQUID at any time ► tinyurl.com/54zjjhv4 🍎Sign up for my courses🍎 ► How to get into MBA programs: forms.gle/9yEyycuP7NnQBjue8 ► How to get into investment banking: forms.gle/wt4cZrezbxVgNzGUA 💻FREE LBO Model💻 ► www.wallstreetprep.com/access/simple-lbo-model-download/

@chriswalter92 2 ай бұрын

Private equity sounds like a mechanism that extracts the most amount of value from a business, and transfers that wealth to the few general partners. Everyone loses - the business, the employees, the local consumers, the tax payers.... except for the general partners

@tahirisaid2693 2 ай бұрын

The people you’re claiming don’t benefit wouldn’t have benefited with or without the private equity buyout. The business was failing before private equity came in, they just more efficiently manage the end of the companies life. Most likely allowing most companies to work there longer than they would have been able to do before.

@hyehyunpark530 Жыл бұрын

Your videos are super clear and helpful! Thank you for putting these together! ❤

@shubhankarshekhar3447 Жыл бұрын

Literally was looking for lbo today..man amazing work 👏

@UNKNOWN-1589 Жыл бұрын

This video is unreal ! Thank you Ben

@FelipeCorto Жыл бұрын

I love this type of content. Keep it up!

@achmadfaizalazmi5199 Жыл бұрын

Thanks bro, this is very helpful! Looking forward to the advanced topics in LBO!

@MJ-cg8vp Жыл бұрын

This is perfect! Loved it!

@altynnurzhekey9118 8 ай бұрын

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!!!

@TommyZchannel Жыл бұрын

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

@ng6966 3 ай бұрын

best LBO model video I've watched so far! thanks a lot!

@xj7937 Жыл бұрын

your videos help a ton!

@soumyaranjansenapati717 7 ай бұрын

Crisp and clear video. Thanks for educating

@Talib_Husain18 Жыл бұрын

Thanks for such a succinct explanation!

@kathyzhang4713 8 ай бұрын

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

@lauravelez1776 9 ай бұрын

Amazing content!!! So easy to understand

@olli999 Жыл бұрын

Very cool video Ben, thank you. I enjoy these model videos. That anime glass glare is a nice bonus haha.

@ayushjain2871 5 ай бұрын

Loved the video. People like you sharing such realistic financial models are seriously rare. Really thankful for it.❤❤

@Roshanvyas25 Жыл бұрын

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

@camilleassiadam5057 Жыл бұрын

I’ve watched all of BIWS and WSP and you demo better than them because you build the model from scratch and we can understand why you’re making every decision/assumption. A lot more applicable, would def buy a full modeling course from you.

@rareaqua7 7 ай бұрын

Greetings from Frankfurt, Germany! I’m continuously amazed by the exceptional quality of your financial modeling content on KZfaq. Your expertise in simplifying complex finance concepts and making them accessible to everyone is truly remarkable. In today’s world, where such knowledge is often behind paywalls, your generosity in sharing it for free is highly commendable. Your contributions are not just educational but also inspirational for aspiring finance professionals globally. Keep up the fantastic work!

@ggas33dfdf Жыл бұрын

Just a hint for everyone else: If you press F4 to fix the row for the revenue you can copy paste the formula for all other items in the model. That you way you don't need to reference revenue all the time :) Thanks for the video!

@user-bs7si1cq4l 7 ай бұрын

Great tutorial! Thank you so much

@chelseajacobs8876 9 ай бұрын

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

@WazMcLaren 8 ай бұрын

Great stuff thank you!

@LarzOG Ай бұрын

I loved the real estate analogies. Super helpful! It seems like this model could even be used to make a real estate purchase if I’m understanding correctly. It might even be easier to make certain assumptions in real estate as opposed to a business.

@aishwaryapotdar1348 11 ай бұрын

Thanks for these videos ❤

@linghuizhu9831 Жыл бұрын

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!!

@xaudaniel Жыл бұрын

Very useful, Thank you.

@antoniostefanile 3 ай бұрын

All crystal clear to improve my models! Thank you!

@dumengyue2401 4 ай бұрын

geeeez, super useful!!!!! thank you !!! already follow and looking forward to watching other videos!!

@htag90 Жыл бұрын

thanks, really useful!

@reefrocks12 8 ай бұрын

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

@bennykell3 Жыл бұрын

Very good video, watched it all start to finish. You learn something new everyday! I work for a hedge fund for a convertible strategy, but always interested in learning new modelling - even after 10 years in the industry. All the best

@fitnesswithayoub2903 Жыл бұрын

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

@narutokun616 Жыл бұрын

HAHAHA the glasses - love it.

@user-fu1ol1cr5d Жыл бұрын

Thank you!

@jeremybacani Жыл бұрын

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

@michaelcortez1798 Жыл бұрын

Would love to see an M&A model in the future as well, great stuff as always!

@adrianbordbar2676 Жыл бұрын

Yess!!

@Sharpyour_mind Жыл бұрын

Thanks dear 😊

@cheyyarguy 3 ай бұрын

This is awesome! Thanks for the video and your time.

@rareliquid 3 ай бұрын

My pleasure!

@jcacere3 Жыл бұрын

I would like an advanced LBO topics video. Great stuff

@michaelchitawo5699 Жыл бұрын

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?

@trebron9512 3 ай бұрын

Amazing, suuuper helpful!! When is the more detail LBO case study video (incl scenarios, sensitivities, different types of debt etc) coming?? Cant wait!

@yannbeko Жыл бұрын

Wow that's like a new version of merger and inquisition. It is really cool that you do this kind of vid's

@rareliquid Жыл бұрын

thank you!

@aishwaryapotdar1348 11 ай бұрын

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

@julie_chen 5 ай бұрын

Thank you ! 🙏

@bacool Жыл бұрын

I see Ben post new modeling tutorial, i hit like button. very simple

@Steven.C.S. Жыл бұрын

Great video. Can you explain why you call it levered cash flow instead of unlevered cash flow as you do not take the debt and interest payments into account?

@kapildev4551 4 ай бұрын

Hi... I have started watching your videos from DCF valuation methods and they are quite interesting and easy to follow. I have one request to you to make one video on IPO Valuation Model (build it from scratch) as I have not seen any detailed video on that. Thank you so much for all the work you are doing!!

@lcuashuron7801 Жыл бұрын

thx bro

@FeilinNi Жыл бұрын

Can you help doing a merger model with accretion/dilution? Thanks!

@leejason7379 Жыл бұрын

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

@JY-kk9uo Жыл бұрын

Can you model out the 3 statements and then perform a DCF?

@fachribudianto1490 Жыл бұрын

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

@aishwaryapotdar1348 11 ай бұрын

Yeah, I love this idea!

@leilaan9344 Жыл бұрын

Could you do a DCF model for a renewable energy or utilities company?

@nandoborchardt4327 10 ай бұрын

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

@SandraTan-id2wt 2 ай бұрын

Hey! Thanks for your video. Just wanted to ask about the paydown on the senior notes. Shouldn't the formula be something like =MIN(Levered FCF, MIN((Levered FCF - Bank Debt Paydown), Beg Balance of Senior Notes). Because if let's say the amount of LCFC you have after paying down your bank debt exceeds the beginning balance of your senior notes, then that would give you a negative ending balance for your senior notes right? Thanks!

@GurdeepSingh-qg5vo 2 ай бұрын

in the debt schedule you could pay out the senior notes first since they bear more interest than the bank debt?

@akankshashrivastava100 Жыл бұрын

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?

@Anonbanker Жыл бұрын

Hey Ben, I’m an incoming summer analyst at JPM in the SF HC group. I really enjoy your videos and they helped me a lot with my recruiting process. I’d love to hop on a 15 min call at some point and hear a bit more about your experience if you have anytime in the next few weeks. Thanks!

@doniii4038 Жыл бұрын

How is it going

@piojosefina2568 Жыл бұрын

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

@hidiryildiz3477 Жыл бұрын

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

@prudentfinance 15 күн бұрын

Where is the model. Cant find it

@vedad5205 8 ай бұрын

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

@vishnuVardhan-in6em 3 ай бұрын

i have a doubt i am not getting why you calculated paydown value differently for in debt schedule for bank debt and sr notes can you clarify that

@gauravbhayana4626 Жыл бұрын

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

@omarnabil1862 Жыл бұрын

why net borrowing is not included in levered cashflow?

@harshsharma5286 4 ай бұрын

if terminal value is given alongside levered FCFs, should I do TV+PV(sum of FCFF) - Net Debt or PV - Net Debt ??

@joaovictorbenaconoliveira8326 8 ай бұрын

Anyone know what mechanical keyboard he uses?

@murarithakur3377 Жыл бұрын

Hey you are saying levered free cash flow but according to your formula it is unlevered free cash flow as you are not subtracting interest. Can you please confirm if it is unlevered or levered free cash flow? Also i can't find the pdf

@GabrielMacari Жыл бұрын

Fialho quando esses 5 benefiarios renovam? Na prática. Consigo vender quantas vezes no ano milhas da tudo azul pela hotmilhas?

@user-vw2id1no6u Жыл бұрын

How similar would this be to doing a paper LBO in an interview?

@vikasmishra7325 7 ай бұрын

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

@RR-et6zp 10 ай бұрын

yeah but how do you raise money to get this

@adiashro 10 ай бұрын

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?

@ayushkabra1119 Жыл бұрын

Why didn’t we choose to pay down the senior debt first and then the bank debt, as the senior debt has higher interest expense?

@jatakatah603 Жыл бұрын

Hi i can access the excel file but i think you have not uploaded the pdf file, can you please provide the link of pdf

@DawnOfDoom12 10 ай бұрын

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?

@rareliquid 10 ай бұрын

mistake on my part lol

@wendelllim7332 Жыл бұрын

Bro please make a more advanced lbo model please 🙏🏼

@lalalianne6516 Күн бұрын

The link for getting the Excel template no longer works, can you please update it?

@lazizaakramova8602 Жыл бұрын

What do you think about AI in the financial industry

@darshan2187 Күн бұрын

did anyone else face the issue of template not found on the provided link?

@marcodimarco2990 10 ай бұрын

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

@edoardotamburi4598 2 ай бұрын

In the explanation for the debt waterfall you said that the higher-interest debt should be paid first (to minimize interest expense). In the example, however, you started principal repayment from the bank debt (6%) to only pay the senior notes (12%) afterwards. I'm wondering if there's a reason for that that maybe I missed because I would've expected the opposite waterfall order... thanks in advance!

@mateobeltroy 2 ай бұрын

That must’ve been a mistake. You’re correct, he should be modeling to pay off the higher interest debt first. Also, he is using the entire amount of levered free cash flow to pay the principal without considering that he needs to subtract the interest from that since he will not have the full amount of levered FCF to apply towards the principal because of the interest payments.

@marvingibson6170 17 сағат бұрын

Does the link to the free LBO model still work? I tried accessing it but was told that the page no longer exist

@seangommier8652 Жыл бұрын

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.

@josslaughton-scott9878 5 ай бұрын

I get why you’d want to pay down the higher interest trance first, but surely the lower interest is less risky and therefore more senior?

@dylanazcarate3944 27 күн бұрын

You didn’t address the circularity from interest payments…does this model not need a circuit breaker?

@FrancescaMercuri-yq3ci Жыл бұрын

Where we can find data to build an Lbo model for a real society?

@aishwaryapotdar1348 11 ай бұрын

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?

@Durrr20235 4 ай бұрын

At step 4, how come the paydown is less than the interest?

@ramansingh7560 4 ай бұрын

It is ausummm

@Nicoleoliver294 3 ай бұрын

What's it called when the LBO doesn't have any company with any debt/cash flow/revenue, and it's just in idea stage?

@collegechats Жыл бұрын

How come you didn't include the debt repayments in computing LFCF? Also how come you started your waterfall paying down the lower cost debt first? Would you not pay down the 12% senior notes first? Thanks for this tutorial regardless - super helpful!

@axeldahlman2405 Жыл бұрын

I think the bank requires you to pay down their debt first, its one of their commands

@monkynutss711 Жыл бұрын

@@axeldahlman2405 Correct

@collingibboney3881 11 ай бұрын

Where do I get this model lol

@QrankChannel 3 ай бұрын

You should have calculated your interest based on the averge of beginning and ending balance.

@avensCL Жыл бұрын

Are you recruiting for PE? You do have the tailor-made CV for that. And also (stereotypical I know but), do you happen to speak Mandarin? Because PE in Asia can straight up make you rich.