Private Equity Masterclass LBO Modeling Focus (2.5 days)

AMT Training
Course summary
Professional Training
2.5 days
1,655 GBP
Full time
Professional Training
Course Dates
Online courses
1,655 GBP
Online delivery option may be available - Please contact provider

1,655 GBP
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Course description

Private Equity Masterclass LBO Modeling Focus (2.5 days)

LBO Valuation

Delegates revisit the 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, delegates establish how much a financial buyer could pay for the target company. Delegates then build a simple LBO model.

Debt Structuring, Capital Structure, Rating and Financing

Delegates revisit the key concepts of debt structuring as well as implications of structural vs. contractual subordination. Many life case studies and exercises will supplement the debt structuring. Following the debt structuring delegates will spend time on capital structure and credit implications. The focus will be on understanding the implications of probabilities of default, risk and optimising risk from a debt issuer as well as a debt investor perspective.

In addition delegates will learn about capital structure and rating of a company, with a particular focus on IG versus high yield debt instruments. As part of this course the delegates will structure an LBO and model the impact of the new financing structure. This session concentrates on understanding the capital structure and rating implications of a new finance structuring.

Complex LBO Modeling and Sponsor Management

Delegates learn about financial sponsors, their investment perspective, exit strategy and how to best decide on a value maximising exit strategy. Delegates will also look at different financing products to be used in the LBO plus a suitable management entry vs. package.

LBO Modeling Issues

Delegates learn how to build complex components of LBO models. Delegates will gain a thorough understanding of why a component is used in practice, how it works and how to model it.

Suitability - Who should attend?

  • Investment Officers and Investment Committee Members
  • Private equity, Venture Capital and Hedge Fund Investment Managers
  • Bankers, Investment Bankers and Security Analysts
  • Private Bankers and Wealth Managers
  • Structured finance professionals
  • Lawyers wishing to understand modern finance
  • Risk Managers


We recommend delegates have a solid understanding of financial statement analysis (balance sheet, income statement and cash flow) and financial modeling skills.

Training Course Content

LBO Valuation

Learning Outcomes

  • What an LBO is and how it can create value
  • LBO valuation as an alternative valuation methodology
  • Characteristics of suitable LBO candidates
  • Estimating cash flows available to capital holders
  • Estimating debt capacity
  • Simplified debt/equity split for entry capital structure
  • Sources and uses of funds
  • Debt structure
  • Estimating the exit value
  • Calculating the IRR
  • Sensitizing the model

Debt Structuring, Capital Structure, Rating and Financing

Learning Outcomes

  • Debt structuring
  • Covenant vs. cash flow based debt capacity
  • Structural vs. contractual subordination
  • Capital structure decisions in the context of corporate strategy
  • What is capital structure analysis?
  • The impact of financial leverage on earnings and returns
    • Using ratios to measure leverage
    • Leverage increases earnings volatility
    • Capital structure in the context of WACC
    • Impact of leverage on EPS and the importance of the use of debt proceeds
    • Using leverage to increase ROE
  • The impact of financial leverage on corporate value
    • The value of the tax shield on interest expense
    • Does an optimal capital structure exist?
  • Capital structure and rating analysis
  • Ratio analysis for credit ratings
  • Investment grade vs. high yield
  • Key items of terms sheets
  • The concept of cash flow lending
    • The lender’s perspective: risk, return and exit routes
  • Advanced structural vs. contractual subordination - case studies
  • Financial instruments used in IG and levered transactions
    • Senior debt (revolving facility, terms A, B and C)
    • Second lien
    • Mezzanine loans
    • High yield bonds
    • PIK notes
    • Preferred shares, shareholder loans and vendor loan notes
    • Ordinary equity

Complex LBO Modeling and Sponsor Management

Learning Outcomes

  • Sponsors and their investment perspective
  • Overview of different type of financial sponsors
  • Sovereign wealth funds - how do they differ from more traditional sponsors?
  • Deal and market update - what is currently happening in the sponsors' space?
  • Sponsor exits
    • Timing considerations
    • Routes to exit
    • Advantages and disadvantages of full exit vs. staged exit
    • Dual track vs. other combined or "hybrid" exit routes
    • Lessons learned from "exits gone wrong"
  • Sponsor return analysis
    • IRR vs. money multiple
    • IRR vs. MIRR vs. XIRR
  • Capital structure and rating implications for the sponsor
  • The concept of cash flow lending
    • The lender’s perspective: risk, return and exit routes
  • Structural vs. contractual subordination
  • Financial instruments used in sponsor transactions
  • Key pros and cons of various leveraged instruments from a sponsor perspective
    • Senior debt (revolving facility, terms A, B and C)
    • Second lien
    • Mezzanine loans
    • High yield bonds
    • PIK notes
    • Preferred shares, shareholder loans and vendor loan notes
    • Ordinary equity
  • Hands on analysis of all items discussed
    • Sources and uses of funds table
    • Ownership structure
    • Management and mezzanine entry vs. exit
    • How to analyze and negotiate warrants
    • Goodwill calculation - sponsors view on goodwill
    • Deal adjustments, including amortization of debt issuance fees
    • Cash flows available for debt servicing
    • Repayment schedules for individual debt instruments
    • Acceleration of debt payments using a cash sweep mechanism
    • RCF - how can the sponsor decide the correct amount to be provided by the banks
    • PIK interest
    • Sensitizing the various chosen debt instruments
    • Sensitizing the capital structure
    • Detailed return analysis to sponsor, management and mezz provider

LBO Modeling Issues

Learning Outcomes

  • Leveraged recapitalization
  • Multiple capital structure scenarios
  • Management ratchets
  • Incorporate a revolving credit facility in the sources and uses of funds
  • Date related IRRs (XIRR)

Course delivery details

While this is a face to face training course, a blended learning approach is taken and delegates will be provided with access to AMT Online. Our study materials contain both the knowledge and practice materials required to assist with the learning process and help you in your job role. Course materials include:

  • e-binder
  • laminated summary sheets
  • 24/7 access to DELTA online learning environment
  • class recordings
  • course notes
  • quizzes
  • electronic homework/study files

About provider

AMT Training - Financial Modeling Courses

For over 20 years we have been equipping analysts and associates with core skills for banking and finance. Our clients include the top ten investment banks and some of the biggest private equity firms in the world. With offices in...

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AMT Training

5th floor Whitechapel Building 10 Whitechapel High Street
E1 8QS London

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Average rating 4.9

Based on 11 reviews.

All concepts explained very concisely and fundamentally; absolutely enjoying it!
Really comprehensive and engaging - as someone with no formal training in accounting it has helped a lot.
Great teaching quality, engaging and effective. Pace is just about right.
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