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

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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.

Опубликовано:

9 июл 2024

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Комментарии : 133

@rareliquid Год назад

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 месяца назад

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 месяца назад

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 Год назад

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

@shubhankarshekhar3447 Год назад

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

@UNKNOWN-1589 Год назад

This video is unreal ! Thank you Ben

@FelipeCorto Год назад

I love this type of content. Keep it up!

@achmadfaizalazmi5199 Год назад

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

@MJ-cg8vp Год назад

This is perfect! Loved it!

@altynnurzhekey9118 8 месяцев назад

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 Год назад

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

@ng6966 3 месяца назад

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

@xj7937 Год назад

your videos help a ton!

@soumyaranjansenapati717 7 месяцев назад

Crisp and clear video. Thanks for educating

@Talib_Husain18 Год назад

Thanks for such a succinct explanation!

@kathyzhang4713 8 месяцев назад

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

@lauravelez1776 9 месяцев назад

Amazing content!!! So easy to understand

@olli999 Год назад

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

@ayushjain2871 5 месяцев назад

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

@Roshanvyas25 Год назад

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

@camilleassiadam5057 Год назад

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 месяцев назад

Greetings from Frankfurt, Germany! I’m continuously amazed by the exceptional quality of your financial modeling content on RU-vid. 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 Год назад

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 месяцев назад

Great tutorial! Thank you so much

@chelseajacobs8876 9 месяцев назад

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

@WazMcLaren 8 месяцев назад

Great stuff thank you!

@LarzOG Месяц назад

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 месяцев назад

Thanks for these videos ❤

@linghuizhu9831 Год назад

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 Год назад

Very useful, Thank you.

@antoniostefanile 3 месяца назад

All crystal clear to improve my models! Thank you!

@dumengyue2401 4 месяца назад

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

@htag90 Год назад

thanks, really useful!

@reefrocks12 8 месяцев назад

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

@bennykell3 Год назад

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 Год назад

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

@narutokun616 Год назад

HAHAHA the glasses - love it.

@user-fu1ol1cr5d Год назад

Thank you!

@jeremybacani Год назад

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 Год назад

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

@adrianbordbar2676 Год назад

Yess!!

@Sharpyour_mind Год назад

Thanks dear 😊

@cheyyarguy 3 месяца назад

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

@rareliquid 3 месяца назад

My pleasure!

@jcacere3 Год назад

I would like an advanced LBO topics video. Great stuff

@michaelchitawo5699 Год назад

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 месяца назад

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

@yannbeko Год назад

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

@rareliquid Год назад

thank you!

@aishwaryapotdar1348 11 месяцев назад

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

@julie_chen 5 месяцев назад

Thank you ! 🙏

@bacool Год назад

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

@Steven.C.S. Год назад

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 месяца назад

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 Год назад

thx bro

@FeilinNi Год назад

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

@leejason7379 Год назад

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 Год назад

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

@fachribudianto1490 Год назад

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 месяцев назад

Yeah, I love this idea!

@leilaan9344 Год назад

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

@nandoborchardt4327 10 месяцев назад

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

@SandraTan-id2wt 2 месяца назад

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 месяца назад

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

@akankshashrivastava100 Год назад

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 Год назад

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 Год назад

How is it going

@piojosefina2568 Год назад

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

@hidiryildiz3477 Год назад

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

@prudentfinance 16 дней назад

Where is the model. Cant find it

@vedad5205 8 месяцев назад

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

@vishnuVardhan-in6em 3 месяца назад

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 Год назад

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

@omarnabil1862 Год назад

why net borrowing is not included in levered cashflow?

@harshsharma5286 4 месяца назад

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

@joaovictorbenaconoliveira8326 8 месяцев назад

Anyone know what mechanical keyboard he uses?

@murarithakur3377 Год назад

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 Год назад

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

@user-vw2id1no6u Год назад

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

@vikasmishra7325 7 месяцев назад

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 месяцев назад

yeah but how do you raise money to get this

@adiashro 10 месяцев назад

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 Год назад

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 Год назад

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 месяцев назад

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 месяцев назад

mistake on my part lol

@wendelllim7332 Год назад

Bro please make a more advanced lbo model please 🙏🏼

@lalalianne6516 2 дня назад

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

@lazizaakramova8602 Год назад

What do you think about AI in the financial industry

@darshan2187 День назад

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

@marcodimarco2990 10 месяцев назад

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

@edoardotamburi4598 2 месяца назад

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 месяца назад

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 День назад

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

@seangommier8652 Год назад

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 месяцев назад

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 дней назад

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

@FrancescaMercuri-yq3ci Год назад

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

@aishwaryapotdar1348 11 месяцев назад

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 месяца назад

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

@ramansingh7560 4 месяца назад

It is ausummm

@Nicoleoliver294 3 месяца назад

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 Год назад

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 Год назад

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

@monkynutss711 Год назад

@@axeldahlman2405 Correct

@collingibboney3881 11 месяцев назад

Where do I get this model lol

@QrankChannel 3 месяца назад

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

@avensCL Год назад

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.