Case Study LPO Model
Mohammed2022
WSP-Basic-LBO_vF-2.xlsxEmpty
| Basic LBO Model | ||||||||
| ($ in millions) | ||||||||
| Step 1. Model Assumptions | ||||||||
| Entry Valuation | Transaction Assumptions | |||||||
| LTM EBITDA | Transaction Fees | |||||||
| Entry Multiple | Financing Fees | |||||||
| Purchase Enterprise Value | Financing Fees Amortization Period | |||||||
| Cash to B/S | ||||||||
| Circularity Toggle | 1 | |||||||
| Debt Assumptions | x EBITDA | $ Amount | Rate | Floor | % Amort. | % Fee | $ Fee | |
| Revolver | ||||||||
| Term Loan B | ||||||||
| Senior Notes | ||||||||
| Total Debt | ||||||||
| Step 2. Sources & Uses Table | ||||||||
| Sources & Uses | ||||||||
| Sources | x EBITDA | $ Amount | Uses | $ Amount | ||||
| Revolver | Purchase Enterprise Value | |||||||
| Term Loan B | Cash to B/S | |||||||
| Senior Notes | Transaction Fees | |||||||
| Sponsor Equity | Financing Fees | |||||||
| Total Sources | Total Uses | |||||||
| Step 3. Free Cash Flow Projection | ||||||||
| FCF Projection | 2020A | 2021 | 2022 | 2023 | 2024 | 2025 | ||
| ($ in millions) | ||||||||
| Revenue | ||||||||
| EBITDA | ||||||||
| Less: D&A | ||||||||
| EBIT | ||||||||
| Less: Interest | ||||||||
| Less: Amortization of Financing Fees | ||||||||
| EBT | ||||||||
| Less: Taxes | ||||||||
| Net Income | ||||||||
| Plus: D&A | ||||||||
| Plus: Amortization of Financing Fees | ||||||||
| Less: Capex | ||||||||
| Less: Δ in NWC | ||||||||
| Less: Mandatory Amortization | ||||||||
| Free Cash Flow (Pre-Revolver) | ||||||||
| Revolver Drawdown / (Paydown) | ||||||||
| Free Cash Flow (Post-Revolver) | ||||||||
| Beginning Cash Balance | ||||||||
| Net Change in Cash Flow | ||||||||
| Ending Cash Balance | ||||||||
| Operating Assumptions | ||||||||
| Revenue Growth % | ||||||||
| EBITDA Margin % | ||||||||
| D&A % of Revenue | ||||||||
| Capex % of Revenue | ||||||||
| Δ in NWC % of Revenue | ||||||||
| Tax Rate % | ||||||||
| Step 4. Debt Schedule | ||||||||
| Debt Schedule | 2021 | 2022 | 2023 | 2024 | 2025 | |||
| ($ in millions) | ||||||||
| LIBOR (%) | 1.5% | 1.7% | 1.9% | 2.1% | 2.3% | |||
| Revolver | ||||||||
| Beginning Balance | ||||||||
| Revolver Drawdown / (Paydown) | ||||||||
| Ending Balance | ||||||||
| Total Revolver Capacity | ||||||||
| Beginning Available Capacity | ||||||||
| Ending Available Capacity | ||||||||
| Revolver Interest Rate | ||||||||
| Revolver Interest Expense | ||||||||
| Unused Revolver Commitment Fee | ||||||||
| Unused Commitment Fee | ||||||||
| Term Loan B | ||||||||
| Beginning Balance | ||||||||
| Less: Mandatory Amortization | ||||||||
| Ending Balance | ||||||||
| TLB Interest Rate | ||||||||
| TLB Interest Expense | ||||||||
| Senior Notes | ||||||||
| Beginning Balance | ||||||||
| Less: Mandatory Amortization | ||||||||
| Ending Balance | ||||||||
| Senior Notes Interest Rate | ||||||||
| Senior Notes Interest Expense | ||||||||
| Step 5. Returns Calculation | ||||||||
| Exit Valuation | 2020A | 2021 | 2022 | 2023 | 2024 | 2025 | ||
| ($ in millions) | ||||||||
| Exit LTM EBITDA | ||||||||
| Exit Multiple Assumption | ||||||||
| Exit Enterprise Value | ||||||||
| Less: Debt | ||||||||
| Plus: Cash | ||||||||
| Exit Equity Value | ||||||||
| Cash (Outflows) / Inflows | Year 0 | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | ||
| 12/31/20 | 12/31/21 | 12/31/22 | 12/31/23 | 12/31/24 | 12/31/25 | |||
| E+xit Year 2021 | ||||||||
| E+xit Year 2022 | ||||||||
| E+xit Year 2023 | ||||||||
| E+xit Year 2024 | ||||||||
| E+xit Year 2025 | ||||||||
| IRR | ||||||||
| MOIC |
Complete
| Basic LBO Model | ||||||||
| ($ in millions) | ||||||||
| Step 1. Model Assumptions | ||||||||
| Entry Valuation | Transaction Assumptions | |||||||
| LTM EBITDA | $100 | Transaction Fees | $10 | |||||
| Entry Multiple | 10.0x | Financing Fees | 2.0% | |||||
| Purchase Enterprise Value | $1,000 | Financing Fees Amortization Period | 7 Years | |||||
| Cash to B/S | $5 | |||||||
| Circularity Toggle | 1 | |||||||
| Debt Assumptions | x EBITDA | $ Amount | Rate | Floor | % Amort. | % Fee | $ Fee | |
| Revolver | 0.0x | - | L + 400 | - | - | 2.0% | - | |
| Term Loan B | 4.0x | 400 | L + 400 | 2.0% | 5.0% | 2.0% | 8 | |
| Senior Notes | 2.0x | 200 | 8.5% | - | - | 2.0% | 4 | |
| Total Debt | 6.0x | $600 | $12 | |||||
| Step 2. Sources & Uses Table | ||||||||
| Sources & Uses | ||||||||
| Sources | x EBITDA | $ Amount | Uses | $ Amount | ||||
| Revolver | 0.0x | - | Purchase Enterprise Value | $1,000 | ||||
| Term Loan B | 4.0x | 400 | Cash to B/S | 5 | ||||
| Senior Notes | 2.0x | 200 | Transaction Fees | 10 | ||||
| Sponsor Equity | 4.3x | 427 | Financing Fees | 12 | ||||
| Total Sources | $1,027 | Total Uses | $1,027 | |||||
| Step 3. Free Cash Flow Projection | ||||||||
| FCF Projection | 2020A | 2021 | 2022 | 2023 | 2024 | 2025 | ||
| ($ in millions) | ||||||||
| Revenue | $1,000 | $1,100 | $1,210 | $1,331 | $1,464 | $1,611 | ||
| EBITDA | $100 | $110 | $121 | $133 | $146 | $161 | ||
| Less: D&A | (22) | (24) | (27) | (29) | (32) | |||
| EBIT | $88 | $97 | $106 | $117 | $129 | |||
| Less: Interest | (41) | (39) | (38) | (37) | (37) | |||
| Less: Amortization of Financing Fees | (2) | (2) | (2) | (2) | (2) | |||
| EBT | $46 | $56 | $67 | $78 | $90 | |||
| Less: Taxes | (16) | (20) | (23) | (27) | (32) | |||
| Net Income | $30 | $36 | $43 | $51 | $59 | |||
| Plus: D&A | 22 | 24 | 27 | 29 | 32 | |||
| Plus: Amortization of Financing Fees | 2 | 2 | 2 | 2 | 2 | |||
| Less: Capex | (22) | (24) | (27) | (29) | (32) | |||
| Less: Δ in NWC | (11) | (12) | (13) | (15) | (16) | |||
| Less: Mandatory Amortization | (20) | (20) | (20) | (20) | (20) | |||
| Free Cash Flow (Pre-Revolver) | $0 | $6 | $12 | $18 | $24 | |||
| Revolver Drawdown / (Paydown) | - | - | - | - | - | |||
| Free Cash Flow (Post-Revolver) | $0 | $6 | $12 | $18 | $24 | |||
| Beginning Cash Balance | $5 | $5 | $11 | $23 | $41 | |||
| Net Change in Cash Flow | 0 | 6 | 12 | 18 | 24 | |||
| Ending Cash Balance | $5 | $11 | $23 | $41 | $65 | |||
| Operating Assumptions | ||||||||
| Revenue Growth % | 10.0% | 10.0% | 10.0% | 10.0% | 10.0% | 10.0% | ||
| EBITDA Margin % | 10.0% | 10.0% | 10.0% | 10.0% | 10.0% | 10.0% | ||
| D&A % of Revenue | 2.0% | 2.0% | 2.0% | 2.0% | 2.0% | |||
| Capex % of Revenue | 2.0% | 2.0% | 2.0% | 2.0% | 2.0% | |||
| Δ in NWC % of Revenue | 1.0% | 1.0% | 1.0% | 1.0% | 1.0% | |||
| Tax Rate % | 35.0% | 35.0% | 35.0% | 35.0% | 35.0% | |||
| Step 4. Debt Schedule | ||||||||
| Debt Schedule | 2021 | 2022 | 2023 | 2024 | 2025 | |||
| ($ in millions) | ||||||||
| LIBOR (%) | 1.5% | 1.7% | 1.9% | 2.1% | 2.3% | |||
| Revolver | ||||||||
| Beginning Balance | - | - | - | - | - | |||
| Revolver Drawdown / (Paydown) | - | - | - | - | - | |||
| Ending Balance | - | - | - | - | - | |||
| Total Revolver Capacity | $50 | $50 | $50 | $50 | $50 | |||
| Beginning Available Capacity | $50 | $50 | $50 | $50 | $50 | |||
| Ending Available Capacity | $50 | $50 | $50 | $50 | $50 | |||
| Revolver Interest Rate | 5.5% | 5.7% | 5.9% | 6.1% | 6.3% | |||
| Revolver Interest Expense | - | - | - | - | - | |||
| Unused Revolver Commitment Fee | 0.25% | 0.25% | 0.25% | 0.25% | 0.25% | |||
| Unused Commitment Fee | $0.1 | $0.1 | $0.1 | $0.1 | $0.1 | |||
| Term Loan B | ||||||||
| Beginning Balance | $400 | $380 | $360 | $340 | $320 | |||
| Less: Mandatory Amortization | (20) | (20) | (20) | (20) | (20) | |||
| Ending Balance | $380 | $360 | $340 | $320 | $300 | |||
| TLB Interest Rate | 6.0% | 6.0% | 6.0% | 6.1% | 6.3% | |||
| TLB Interest Expense | $23 | $22 | $21 | $20 | $20 | |||
| Senior Notes | ||||||||
| Beginning Balance | $200 | $200 | $200 | $200 | $200 | |||
| Less: Mandatory Amortization | - | - | - | - | - | |||
| Ending Balance | $200 | $200 | $200 | $200 | $200 | |||
| Senior Notes Interest Rate | 8.5% | 8.5% | 8.5% | 8.5% | 8.5% | |||
| Senior Notes Interest Expense | $17 | $17 | $17 | $17 | $17 | |||
| Step 5. Returns Calculation | ||||||||
| Exit Valuation | 2020A | 2021 | 2022 | 2023 | 2024 | 2025 | ||
| ($ in millions) | ||||||||
| Exit LTM EBITDA | $110 | $121 | $133 | $146 | $161 | |||
| Exit Multiple Assumption | 10.0x | 10.0x | 10.0x | 10.0x | 10.0x | |||
| Exit Enterprise Value | $1,100 | $1,210 | $1,331 | $1,464 | $1,611 | |||
| Less: Debt | (580) | (560) | (540) | (520) | (500) | |||
| Plus: Cash | 5 | 11 | 23 | 41 | 65 | |||
| Exit Equity Value | $525 | $661 | $814 | $985 | $1,176 | |||
| Cash (Outflows) / Inflows | Year 0 | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | ||
| 12/31/20 | 12/31/21 | 12/31/22 | 12/31/23 | 12/31/24 | 12/31/25 | |||
| E+xit Year 2021 | ($427) | $525 | ||||||
| E+xit Year 2022 | ($427) | $661 | ||||||
| E+xit Year 2023 | ($427) | $814 | ||||||
| E+xit Year 2024 | ($427) | $985 | ||||||
| E+xit Year 2025 | ($427) | $1,176 | ||||||
| IRR | 23.1% | 24.4% | 24.0% | 23.2% | 22.4% | |||
| MOIC | 1.2x | 1.5x | 1.9x | 2.3x | 2.8x |
