LBO MODEL EXAM QUESTIONS AND ANSWERS WITH COMPLETE SOLUTIONS VERIFIED LATEST UPDATE

LBO MODEL EXAM QUESTIONS AND ANSWERS WITH

COMPLETE SOLUTIONS VERIFIED LATEST UPDATE


Assumptions

Purchase price, % debt, debt terms, sources & uses

Types of Covenants

Maintenance and incurrance

Ex Maintenance covenants

Debt/ebitda, ebitda/interest expense

Leverage ratio

Debt/EBITDA

Interest coverage ratio

EBITDA / Interest Expense

Do you pay eqv or ev

Ev if repay existing debt, eqv if assume existing debt

FCF

Cash from operations - capex and recurring items cash flow from investing or financing

Rev growth projection

Decline over time ex 10-5

BS items projection

% of rev, cogs, or opexx use historical %

Capex projection

, % of rev, hist avg, fixed dollar growth

Why fcf matters lbo

How much cash left to pay of debt

How to pay off debt with fcf

Required, min cash levels, optional

2x 5yrs irr

15%

2x 3yrs irr

26%

3x 5yrs irr

25%

PIK Interest acceues to

Principle

3x 3yrs irr

44%

Ebit / ebitda margin projection

Stay same

Items with greatest IRR impact

Purchase price, % debt/equity, exit price

Coverage Ratio

EBITDA / Interest Expense

High yield debt has ____ interest type generally

Fixed