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The Banking and Corporate Finance Training Specialist
Advanced LBO Modelling
A Practical Workshop
This course is presented in London on:
28-29 June 2018, 15-16 November 2018, 14-15 February 2019,
27-28 June 2019, 7-8 November 2019
This course can also be presented in-house for your company
or via live on-line webinar
http://redcliffetraining.com [email protected]
+44 (0)20 7387 4484
Course Overview
Participants will: Learn about the LBO Market and the effect of leveraged on the value of a business
Get an overview of the LBO process, including how to determine the capital structure and assess the value creation.
Have explained to them how to value the target by sourcing information, building a DCF valution and comparing and contrasting DCF and the LBO model structure
Master the key elements of an LBO model including debt waterfalls Gain an understanding of the debt capacity for LBO financing Learn about the capital providers and their typical characteristics
Be introduced to APV analysis and its uses
Leverage Overview Background to the LBO market
Introductory theory - The effect of leverage on firm value
Valuing the target
Sourcing information – Historic and forecast data Analysing equity research
Key attributes of broker analysis
Pluses and minuses of equity research Building a DCF valuation using equity research
Modelling the stand alone valuation DCF valuation Use of multiples in valuation (EV/EBIT, EV/EBITDA)
Case Study I: Participants model the stand alone valuation of the target using historic data and equity research
LBO Modelling Overview Key elements of an LBO model
Comparing and contrasting DCF and LBO models Sources and uses of funds
Key drivers in an LBO model From stand alone valuation to LBO analysis
Case Study II: Participants use the stand alone valuation of the target to complete an LBO model
Assessing debt capacity for LBO financing
Financial interdependencies Financing growth
Sustainable debt Target debt capacity assumed in a WACC calculation, debt capacity and interest cover
Debt capacity in LBOs
Debt capacity multiples in practice and credit analysis
Case Study III: Modelling the debt capacity of the target using multiple and credit analysis
Course Content
Course Objectives
http://redcliffetraining.com [email protected]
+44 (0)20 7387 4484
Capital providers and their typical characteristics Institutional and management equity Traditional/new lenders
Senior tranche profiles A, B, C, RCF
Subordinated tranche profiles Second lien
Mezzanine (with/without warrants) PIK High yield bonds
More complex issues – warrants and options Typical LBO transaction sensitivity analysis, management, base and payout cases
Case Study IV: Modelling a more complex capital structure with various scenarios calculating exit value and IRR for each of the capital providers
Assessing value creation in LBO transactions – APV analysis
Key components of an APV valuation
Unlevered value Value of the tax shield
Direct and indirect cost of leverage APV valuation and DCF valuation APV valuation in a steady state
Calculating AP in a steady growth environment Incorporating APV analysis in an LBO transaction analysis
Case Study V: Where has value been created, modelling APV analysis for an LBO transaction
The trainer is a qualified chartered accountant, who spent several years in corporate
finance post qualification. He then spent 18 years in the investment management industry as an analyst/fund manager with Threadneedle Asset Management, a director
and head of UK Equities at Scottish Widows Investment Partnership as European, then Global Head of Equity Research at HSBC Asset Management. He ran various types of retail and wholesale funds and produced research on companies in Europe and on a
global basis. He developed valuation and research processes and managed teams of European and global analysts and fund managers.
Since leaving the investment management industry the trainer has managed the investment management and investment banking operations of a UK based training
company developing programmes for clients as diverse as HSBC, Morgan Stanley, Deutsche Bank, Citigroup, Allen & Overy, JP Morgan, Barclays Bank, Barclays Wealth,
Morgan Stanley Investment Management and Schroders. He has managed major graduate programmes for investment banking and investment management clients, training graduate to managing director level participants and advising clients on their
Background of the trainer
http://redcliffetraining.com [email protected]
+44 (0)20 7387 4484
training requirements for accountancy, corporate finance and valuation, investment
management and private wealth training.
This course covers the key elements of modelling in an LBO analysis. Participants will value the target business using historic data and available equity research. The valuation process will incorporate absolute and relative valuation techniques. Once the target
business has been valued, participants will be introduced to LBO analysis and construct an LBO model. The LBO modelling analysis will be developed by assessing the debt
capacity of the business to determine the range of capital structures available for the transaction and how credit analysis is used in the LBO modelling process.
The participants will then cover more complex LBO instruments such as warrants and PIKs, how they can be incorporated into an LBO structure and how to calculate returns
to each of the equity and debt providers. Participants will model a more complex capital structure and calculate exit values and the IRRs generated by each investor. Using the
integrated model participants will then analyse various scenarios (management case, base case, payout case) to derive the optimum financing structure taking into account the financial constraints of each investor.
The participants will then undertake an adjusted present value (“APV”) analysis to
determine where value has been created in the LBO transaction using an APV model and finally look at a recovery analysis for a failed LBO transaction.
Case Study: The participants will use a variety of case studies and exercises during the two days, based on publically quoted and generic companies.
Participants will be required to bring a laptop and a calculator to the course
Course Summary
http://redcliffetraining.com [email protected]
+44 (0)20 7387 4484
What Redcliffe’s clients are saying about the course
“Took the time to explain and make sure we all understood before moving on”
-- Private Equity Analyst, Ardian
“Well built up approach to the case studies” --IslandBanki
“Practical approach, covered important topics”
--Associate, Credo Partners
Materials provided were good, professional knowledge -- Portfolio Manager, Caixa Capital Risc
http://redcliffetraining.com [email protected]
+44 (0)20 7387 4484
09:30-17:00
London
Standard Price: £1,300 +VAT Membership Price: £1,040 + VAT
In-House Training
Delivering this course in-house for a number of participants could be very cost effective.
The venue and timing can be agreed to suit the client, as well as the selection of the trainer and the precise contents of the seminar.
Tailored Learning
All of our training courses can be tailored to suit your company’s exact training needs.
We will work closely with you to help develop a training programme with content that is unique for your organisation.
Please email us on [email protected] for more information
E-Learning
This course can also be presented as a bespoke e-learning programme created by you to fit your exact requirements.
