LBO Modeling
End-to-end buyout structure: entry valuation, financing, operating forecast, exit and returns, with scenario-driven assumptions.
Leveraged Buyout Modeling | M&A Analysis | Investor Returns
This is an independent LBO and acquisition financial modeling project. It models the leveraged buyout of a hypothetical industrial company, from the purchase price and financing plan through a five-year operating forecast, debt paydown, exit and sponsor returns.
Developed and adapted a leveraged buyout and acquisition financial model analyzing transaction structure, operating performance, debt financing, exit valuation, and sponsor returns.
The model incorporates transaction assumptions, Sources & Uses, operating projections, debt schedules, interest expense, debt paydown, exit analysis, and investor return calculations. A Base / Upside / Downside selector flexes the whole model, and 14 automated integrity checks confirm it stays balanced.
Key outputs include enterprise value, purchase price, debt financing, sponsor equity contribution, exit value, IRR, MOIC, and sensitivity analysis across key transaction assumptions.
Each tab feeds the next: assumptions drive the purchase price and financing, the operating forecast drives debt paydown, and the debt balance at exit determines what the sponsor receives.
Entry, operating, financing and exit inputs on one sheet, with scenario-driven cells flagged.
LTM EBITDA × entry multiple gives enterprise value; existing net debt is refinanced at close.
Senior loan and subordinated notes fund the deal; sponsor equity is the balancing plug and a funding check must equal zero.
Five-year build from revenue to EBITDA, net income and cash flow available for debt service.
Senior term loan and subordinated notes accrue interest on beginning-of-year balances.
Mandatory amortization plus a cash sweep of excess cash flow reduces debt each year.
Year-5 EBITDA × exit multiple, less remaining debt and exit fees, plus cash.
Exit equity value is allocated between the sponsor and any management rollover.
Returns are computed from an explicit sponsor cash-flow array.
Four two-way grids flex entry and exit multiples, EBITDA growth and leverage; a Base / Upside / Downside selector flexes the whole model.
End-to-end buyout structure: entry valuation, financing, operating forecast, exit and returns, with scenario-driven assumptions.
Debt, rollover and sponsor equity fund the equity purchase, debt refinancing, fees and minimum cash. Sponsor equity is the balancing plug.
Five-year build from revenue and EBITDA margin to net income and cash flow available for debt service.
Senior term loan and subordinated notes with mandatory amortization, a cash sweep, interest expense and credit statistics.
Exit enterprise value bridged to sponsor proceeds, with MOIC and IRR calculated from the sponsor's cash flows.
Four two-way sensitivity grids and a Base / Upside / Downside selector show how returns respond to key assumptions.
Each figure is tagged as an input assumption or a calculated output. Values are computed from the workbook's own formulas (Base scenario) and are not read live from the file.
| Scenario | Revenue growth | Margin exp. | Exit multiple | Senior / sub rate | Exit EV | Sponsor proceeds | MOIC | IRR |
|---|---|---|---|---|---|---|---|---|
| Base | 5.0% | 20 bps | 10.0x | 8.5% / 11.0% | $1,327.3M | $794.0M | 2.23x | 17.4% |
| Upside | 8.0% | 35 bps | 11.0x | 8.0% / 10.5% | $1,729.4M | $1,251.7M | 3.52x | 28.6% |
| Downside | 2.0% | 0 bps | 8.5x | 9.5% / 12.5% | $938.5M | $332.7M | 0.94x | −1.3% |
Each scenario row was calculated by evaluating the workbook's formulas with the selector on the Scenario tab set to that case; all 14 integrity checks pass in every case. The Base case is what the workbook is saved on. The workbook's own notes describe a target range of roughly 20–25% IRR and 2.5–3.5x MOIC; the Base case sits below that range, and the Downside case does not return the invested capital.
Type a question about this deal, or tap one below. It answers only from this model's own figures and assumptions.
Each view is rebuilt from the calculated values of a worksheet, so the numbers stay legible on any screen.
| Target company | Summit Industrial Holdings, Inc.* (hypothetical) |
| Entry enterprise value | $1,000.0M |
| Entry EBITDA (LTM) | $100.0M |
| Entry EV / EBITDA | 10.0x |
| Total debt financing | $700.0M |
| Sponsor equity | $355.5M |
| Entry leverage (debt / EBITDA) | 7.0x |
| Holding period | 5 years |
| Exit enterprise value | $1,327.3M |
| Exit EBITDA (Year 5) | $132.7M |
| Exit EV / EBITDA | 10.0x |
| Sponsor proceeds at exit | $794.0M |
| MOIC | 2.23x |
| IRR | 17.4% |
| Revenue growth rate (p.a.) | 5.0% |
| EBITDA margin expansion (bps / yr) | 20 |
| Cash tax rate | 25.0% |
| Senior term loan rate | 8.5% |
| Subordinated notes rate | 11.0% |
| Cash sweep % | 75% |
| Active scenario | Base |
Summit Industrial Holdings, Inc. is a hypothetical company created for this case study. Figures are illustrative, not a real transaction.
| Sources | $MM | % total |
|---|---|---|
| Senior Term Loan | 500.0 | 47.4% |
| Subordinated / Mezzanine Notes | 200.0 | 18.9% |
| Management Rollover Equity | 0.0 | 0.0% |
| Sponsor Equity (balancing plug) | 355.5 | 33.7% |
| Total sources | 1,055.5 | 100.0% |
| Uses | $MM | % total |
|---|---|---|
| Equity Purchase Price | 800.0 | 75.8% |
| Refinance Existing Debt | 200.0 | 18.9% |
| Transaction Fees | 25.0 | 2.4% |
| Financing Fees | 10.5 | 1.0% |
| Minimum Cash Funded at Close | 20.0 | 1.9% |
| Total uses | 1,055.5 | 100.0% |
| LTM EBITDA | $100.0M |
| Entry EV / EBITDA multiple | 10.0x |
| Entry enterprise value | $1,000.0M |
| Less: existing net debt (refinanced at close) | ($200.0M) |
| Implied equity purchase price | $800.0M |
| Total sources − total uses (must = 0) | 0.0 |
| Funding check status | PASS |
| Implied total leverage (debt / LTM EBITDA) | 7.0x |
| Sponsor equity % of total capitalization | 33.7% |
Sponsor equity is solved as the balancing plug: total uses less the senior term loan, subordinated notes and any management rollover.
| $ in millions | Entry (LTM) | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|---|
| Revenue | 400.0 | 420.0 | 441.0 | 463.1 | 486.2 | 510.5 |
| Revenue growth % | — | 5.0% | 5.0% | 5.0% | 5.0% | 5.0% |
| EBITDA margin % | 25.0% | 25.2% | 25.4% | 25.6% | 25.8% | 26.0% |
| EBITDA | 100.0 | 105.8 | 112.0 | 118.5 | 125.4 | 132.7 |
| EBITDA growth % | — | 5.8% | 5.8% | 5.8% | 5.8% | 5.8% |
| Less: D&A | — | 10.5 | 11.0 | 11.6 | 12.2 | 12.8 |
| EBIT | — | 95.3 | 101.0 | 107.0 | 113.3 | 120.0 |
| Less: interest expense | — | 64.5 | 63.1 | 61.3 | 59.2 | 56.7 |
| EBT (pre-tax income) | — | 30.8 | 37.9 | 45.6 | 54.1 | 63.3 |
| Less: cash taxes | — | 7.7 | 9.5 | 11.4 | 13.5 | 15.8 |
| Net income | — | 23.1 | 28.4 | 34.2 | 40.6 | 47.4 |
| Plus: D&A | — | 10.5 | 11.0 | 11.6 | 12.2 | 12.8 |
| Less: capital expenditures | — | (12.6) | (13.2) | (13.9) | (14.6) | (15.3) |
| Less: increase in net working capital | — | (0.4) | (0.4) | (0.4) | (0.5) | (0.5) |
| Cash flow available for debt service (CFADS) | — | 20.6 | 25.8 | 31.5 | 37.7 | 44.4 |
| CFADS / EBITDA conversion | — | 19.5% | 23.0% | 26.5% | 30.0% | 33.5% |
Five-year forecast from revenue to cash flow available for debt service. Interest expense links from the Debt Schedule on beginning-of-year balances, so the model has no circular references.
| $ in millions | Entry (LTM) | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|---|
| CFADS | — | 20.6 | 25.8 | 31.5 | 37.7 | 44.4 |
| Senior term loan — beginning balance | — | 500.0 | 483.3 | 462.7 | 437.8 | 408.3 |
| Mandatory amortization | — | 5.0 | 5.0 | 5.0 | 5.0 | 5.0 |
| Optional prepayment (cash sweep) | — | 11.7 | 15.6 | 19.9 | 24.5 | 29.6 |
| Senior term loan — ending balance | 500.0 | 483.3 | 462.7 | 437.8 | 408.3 | 373.8 |
| Senior interest expense | — | 42.5 | 41.1 | 39.3 | 37.2 | 34.7 |
| Subordinated notes — beginning balance | — | 200.0 | 200.0 | 200.0 | 200.0 | 200.0 |
| Optional prepayment (post-senior sweep) | — | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Subordinated notes — ending balance | 200.0 | 200.0 | 200.0 | 200.0 | 200.0 | 200.0 |
| Subordinated interest expense | — | 22.0 | 22.0 | 22.0 | 22.0 | 22.0 |
| Total debt — ending balance | 700.0 | 683.3 | 662.7 | 637.8 | 608.3 | 573.8 |
| Total interest expense | — | 64.5 | 63.1 | 61.3 | 59.2 | 56.7 |
| Cash balance — ending | 20.0 | 23.9 | 29.1 | 35.7 | 43.9 | 53.7 |
| Total debt / EBITDA | 7.00x | 6.46x | 5.92x | 5.38x | 4.85x | 4.32x |
| Net debt / EBITDA | 6.80x | 6.23x | 5.66x | 5.08x | 4.50x | 3.92x |
| Senior debt / EBITDA | 5.00x | 4.57x | 4.13x | 3.69x | 3.26x | 2.82x |
| Interest coverage (EBITDA / interest) | — | 1.64x | 1.78x | 1.93x | 2.12x | 2.34x |
The senior term loan takes a 1.0% mandatory amortization plus a cash sweep of 75% of remaining CFADS; the subordinated notes are only swept once the senior loan is repaid. In the Base case the senior loan is not fully repaid, so the subordinated notes stay at $200.0M.
| Exit year | 5 |
| Exit-year EBITDA | $132.7M |
| Exit EV / EBITDA multiple | 10.0x |
| Exit enterprise value | $1,327.3M |
| Less: remaining total debt | ($573.8M) |
| Plus: cash balance at exit | $53.7M |
| Less: estimated exit / sale fees | ($13.3M) |
| Total equity value at exit | $794.0M |
| Sponsor equity % of capital at close | 100.0% |
| Sponsor proceeds at exit | $794.0M |
| Management rollover proceeds at exit | $0.0M |
| Sponsor equity invested (year 0) | $355.5M |
| Sponsor proceeds at exit | $794.0M |
| Holding period | 5 years |
| MOIC | 2.23x |
| IRR | 17.4% |
| Cross-check: MOIC^(1/n) − 1 | 17.4% |
| Sponsor cash flow · $M | Entry (LTM) | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|---|
| Sponsor equity cash flow | (355.5) | 0.0 | 0.0 | 0.0 | 0.0 | 794.0 |
MOIC and IRR are computed only from the sponsor's own equity cash flows, invested at close and returned at exit. No interim dividends or recapitalizations are modeled, so IRR reconciles exactly to MOIC^(1/n) − 1.
columns: exit EV/EBITDA · rows: entry EV/EBITDA
| Entry ↓ / Exit → | 8.0x | 9.0x | 10.0x | 11.0x | 12.0x |
|---|---|---|---|---|---|
| 8.0x | 28.7% | 34.5% | 39.5% | 43.8% | 47.7% |
| 9.0x | 16.0% | 21.2% | 25.7% | 29.6% | 33.1% |
| 10.0x | 8.4% | 13.3% | 17.4% | 21.1% | 24.3% |
| 11.0x | 3.0% | 7.7% | 11.6% | 15.1% | 18.2% |
| 12.0x | −1.1% | 3.4% | 7.2% | 10.5% | 13.5% |
Holds new debt at the Base Case dollar amount. Highlighted cell = Base case.
columns: exit EV/EBITDA · rows: entry debt / EBITDA
| Leverage ↓ / Exit → | 8.0x | 9.0x | 10.0x | 11.0x |
|---|---|---|---|---|
| 5.0x | 5.8% | 9.3% | 12.5% | 15.3% |
| 6.0x | 6.8% | 10.9% | 14.5% | 17.7% |
| 7.0x | 8.4% | 13.3% | 17.4% | 21.1% |
| 8.0x | 10.9% | 17.0% | 22.0% | 26.3% |
| 9.0x | 15.9% | 23.9% | 30.2% | 35.6% |
Holds entry EV fixed; remaining debt at exit approximated using the Base Case dollar debt paydown. Highlighted cell = Base case.
columns: EBITDA CAGR · rows: exit EV/EBITDA
| Exit ↓ / Growth → | 2% | 3% | 5% | 7% | 9% |
|---|---|---|---|---|---|
| 8.0x | −0.1% | 2.3% | 6.7% | 10.7% | 14.5% |
| 9.0x | 5.5% | 7.6% | 11.7% | 15.5% | 19.1% |
| 10.0x | 10.0% | 12.0% | 15.9% | 19.6% | 23.1% |
| 11.0x | 13.9% | 15.9% | 19.6% | 23.2% | 26.6% |
Exit EBITDA = entry EBITDA × (1 + g)^holding period; entry structure and debt paydown held at Base.
columns: EBITDA CAGR · rows: exit EV/EBITDA
| Exit ↓ / Growth → | 2% | 3% | 5% | 7% | 9% |
|---|---|---|---|---|---|
| 8.0x | 1.00x | 1.12x | 1.38x | 1.66x | 1.97x |
| 9.0x | 1.30x | 1.44x | 1.74x | 2.05x | 2.39x |
| 10.0x | 1.61x | 1.77x | 2.09x | 2.44x | 2.82x |
| 11.0x | 1.92x | 2.09x | 2.45x | 2.83x | 3.25x |
Same construction as Table B, expressed as MOIC.
The four grids are live closed-form formulas rather than Excel What-If data tables, so every cell can be audited. Because they hold some variables at Base values, the workbook notes they are directionally reliable but will not exactly match a full re-run of the debt schedule for every combination.
A hypothetical target with $400M of LTM revenue and $100M of LTM EBITDA is acquired; existing net debt of $200M is refinanced at close, and a management rollover input (set to zero) can model co-investment.
Enterprise value is LTM EBITDA multiplied by the entry multiple (10.0x); subtracting existing net debt gives the implied equity purchase price.
Uses cover the equity purchase price, refinanced debt, transaction fees (2.5% of EV), financing fees (1.5% of new debt) and minimum cash. Sources are the two debt tranches, any rollover and sponsor equity, which is solved as the plug so that sources equal uses.
Revenue grows at the scenario rate and EBITDA margin expands by a set number of basis points a year. D&A, capex and working capital follow percentage assumptions, cash taxes are the tax rate applied to positive pre-tax income, and CFADS is net income plus D&A less capex and working-capital investment.
The senior term loan amortizes 1.0% a year and receives a cash sweep of 75% of remaining CFADS, with any excess going to the subordinated notes once the senior loan is repaid. Interest accrues on beginning-of-year balances, which avoids circular references.
Cash left after debt repayment builds on the balance sheet, so both the remaining debt and the cash balance at exit feed directly into exit equity value.
Exit enterprise value is Year-5 EBITDA multiplied by the exit multiple. Less remaining debt and 1.0% exit fees, plus cash, gives equity value, which is split between the sponsor and any rollover holders.
MOIC is sponsor proceeds divided by sponsor equity invested. IRR uses Excel's IRR function on an explicit year-by-year sponsor cash-flow array, and is cross-checked against MOIC^(1/n) − 1.
Four two-way grids recalculate IRR or MOIC with closed-form formulas for different entry and exit multiples, EBITDA growth and leverage, rather than Excel data tables. Each grid documents which variables it holds at Base values.
Adapted and extended from an existing leveraged buyout / acquisition financial modeling framework. The transaction analysis, modeling assumptions, financial analysis, returns analysis, and portfolio presentation were developed and adapted for this independent finance project.
Built on an open-source outline. The starting point was an open-source LBO repository, distributed under the MIT License, whose README described a five-tab model architecture but which contained no spreadsheet. This workbook is my build-out of that outline, extended with an executive dashboard, scenario selector, four sensitivity grids and automated model checks, and it is likewise made available under the MIT License. The license notice is reproduced below as it appears in the workbook.
MIT License — Copyright (c) 2025 YOUR_NAME. Permission is hereby granted, free of charge, to any person obtaining a copy of this software and associated documentation files (the “Software”), to deal in the Software without restriction, including without limitation the rights to use, copy, modify, merge, publish, distribute, sublicense, and/or sell copies of the Software, subject to including the above copyright notice in all copies. THE SOFTWARE IS PROVIDED “AS IS”, WITHOUT WARRANTY OF ANY KIND, EXPRESS OR IMPLIED.
Open the workbook to trace every figure back to its assumption and switch between the Base, Upside and Downside cases.
LBO_Acquisition_Analysis_Model.xlsx · Excel workbook · 32 KB · recalculates when opened in Excel