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Leveraged Buyout (LBO) Modelling

A leveraged buyout (LBO) is a type of acquisition in the business world whereby the vast majority of the cost of buying a company is financed by borrowed funds. LBOs are often executed by private equity firms who attempt to raise as much funding as possible using various types of debt to get the transaction completed. Capital for an LBO can come from banks, mezzanine financing, and bond issues.

Leveraged Buyout Models are useful in:

  • Determining a fair valuation for a company (including an ability-to-pay analysis)
  • Determining the equity returns (through IRR calculations) that can be achieved if a company is taken private, grown, and ultimately sold or taken public
  • Determining the effect of recapitalizing the company through issuance of debt to replace equity
  • Determining the debt service limitations of a company from its cash flows

Using an LBO model constructed by Achieve Corporation will enable you to:

  • Calculate the actual price to be paid for a company
  • Model the company’s past and future cashflow to pay back the debt
  • Determine the earnings capacity of the business
  • Verify that the decision to acquire a business using Leverage buyout Principles is the correct one to take  

We can act for either the buy or sell side in preparation for Leverage Buyout Models.

For a discussion in the strictest confidence of the benefits of LBO modelling, please contact