Public Course

Transaction Comparables and LBO Analysis Fundamentals

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  • What you'll learn
  • Venue
  • Prerequisites
  • What you'll learn
  • Transaction Comparables

    Participants are introduced to preparing a transaction multiples matrix using LTM earnings. The rationale and components of control premium and its impact on valuation are discussed. A comparable transaction analysis is performed on the case industry.

    Learning outcomes

    • Difference between trading multiples and multiples from precedent transactions
    • Selection of transactions and information gathering
    • Change of control issues
      • Share capital and equity linked instruments
      • Pensions
      • Poison pills
    • Control premium and synergies
    • Bottom up calculation of enterprise and equity value multiples
    • Practical issues with transaction comparables
    • Analysis and summary output

    LBO Analysis Fundamentals

    Participants are introduced to the basic concepts underlying leveraged buyouts. The session starts by establishing why private equity firms can create value through leveraged buyouts and how the levered valuation fits into the valuation roadmap. Using a simple free cash flow forecast, participants establish how much a financial buyer could pay for the target company. Participants then build a simple LBO model.

    Learning outcomes

    • LBO overview
    • What is an LBO and how it can create value
    • How leverage increases the return on equity
    • LBO valuation as an alternative valuation methodology
    • Characteristics of suitable LBO candidates
    • Sources and uses of funds at entry
    • Simplified debt / equity split for entry capital structure
    • Simple operating forecast
    • Estimating cash flows available to capital holders
    • Distribution of proceeds at exit
    • Exit routes
    • Estimating the exit value
    • Calculating the returns
    • Money-on-money / Multiple of invested capital
    • Analysis of the output
    • Debt structure and debt characteristics
    • The concept of cash flow lending
    • Estimating debt capacity
    • Financial instruments used in levered transactions
      • Senior debt (revolving facility, term A, term B, term C)
      • Second lien
      • Mezzanine loans
      • High yield bonds
      • PIK notes
      • Preferred shares, shareholder loans, vendor loan notes
      • Ordinary equity
    • Structural subordination
  • Venue
  • London: Tenter House, 45 Moorfields, London EC2Y 9AE

  • Prerequisites
  • A solid understanding of the topics covered by our courses in Financial Statement Analysis and Financial Modeling are desirable:

    Financial Statement Analysis

    Financial Modeling

    • Financial Modeling - Fundamentals
    • Financial Modeling - Cash Sweep and Troubleshooting
    • Financial Modeling - From Scratch

     

          Pre-Requisites

          Who should attend?

          New hires who have joined the firm late and missed the in-house program

          Individuals looking to fill a knowledge gap

          Experienced bankers looking to refresh their technical skills

          Teams employed in financial strategy roles from non-banking corporations

          Graduates preparing to interview for a role in the finance sector

          Students at business school and looking for a career in finance

          What to use

          You need to use a Windows-based laptop for the training with Excel and Adobe installed on your system to access your course files. Our teaching materials are designed for PCs and not MAC based systems. Download details for the necessary files will be emailed a few days before the course. You can use any version of MS Excel in class. Please inform us of your Excel version when booking your course.

          Ask our trainers

          If you have any questions about the course content, you can email our experienced trainers for any further questions

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