Walk me through an lbo - Study guides, Class notes & Summaries

400 IB Questions Verified Answers Let's say I'm working on an IPO for a client. Can you describe briefly what I would do? (5) ️1. Assuming you've won the lead left at the bakeoff , you MEET with the CLIENT and gather basic financial, industry, and customer information 2. Next you are going to meet with other BANKERS and LAWYERS to DRAFT S-1 registration (which describes the company's business to investors) 3. Receive comments on S1 from SEC and keep revising until it i...

LBO Questions And Answers Walk me through a basic LBO model. - ANS "In an LBO Model, Step 1 is making assumptions about the Purchase Price, Debt/Equity ratio, Interest Rate on Debt and other variables; you might also assume something about the company's operations, such as Revenue Growth or Margins, depending on how much information you have. Step 2 is to create a Sources & Uses section, which shows how you finance the transaction and what you use the capital for; this also tells you h...

LBO Model Guide Correct Questions & Answers(graded A+) LBO Model Guide Correct Questions & Answers(graded A+) What is a leveraged buyout, and why does it work? - ANSWER In a leveraged buyout (LBO), a private equity firm acquires a company using a combination of debt and equity (cash), operates it for several years, possibly makes operational improvements, and then sells the company at the end of the period to realize a return on investment. During the period of ownership, the PE firm uses...

LBO MODEL (BASIC) EXAM QUESTIONS AND ANSWERS WITH COMPLETE SOLUTIONS VERIFIED LATEST UPDATE What is an LBO? -A type of acquisition where a company is bought using mostly debt. -The idea is that a small amount of equity is combined with a large amount of debt to buy a company. Why do we use LBOs? -Isn't to value a company -Instead, it's to determine if buying a company using mostly debt is a good idea and whether investors (PE firms) can make a return on their money -The goal is fo...

You've never worked in finance before. How much do you know about what bankers actually do? (Ans- I've done a lot of research on my own. Based on that, I know that bankers advise companies on transactions - buying and selling other companies, and raising capital. They are "agents" that connect a company with the appropriate buyer, seller, or investor. The day-to-day work involves creating presentations, financial analysis and marketing materials such as Executive Summaries. Let's say...

What is a leveraged buyout, and why does it work? - ANSWER In a leveraged buyout (LBO), a private equity firm acquires a company using a combination of debt and equity (cash), operates it for several years, possibly makes operational improvements, and then sells the company at the end of the period to realize a return on investment. During the period of ownership, the PE firm uses the company's cash flows to pay interest expense from the debt and to pay off debt principal. An LBO delivers...

Can you walk me through how you might make an investment decision based on the output from an LBO model? 1) Determine investment criteria (IRR and MoM multiple) 2) Build projections and look at LBO model output for Base Case. If numbers work, build projections for Downside Case 3) Back up decision with qualitative criteria. Why might you recommend AGAINST a deal even if the IRRs and MoM multiples are favorable in the Downside, Base, and Upside cases? You might recommend against a deal if there...

LBO MODELING EXAM QUESTIONS AND ANSWERS VERIFIED GRADED A++ LATEST UPDATE Walk me through the mechanics of building an LBO model. 1. Entry valuation 2. Sources & uses table 3. Free cash flow build 4. Exit valuation & returns 5. Sensitivity analysis What is the purpose of the "sources & uses" section of an LBO? Outlines the amount of capital required to complete the transaction and how the proposed deal will be funded. From the private equity firms perspective, the key componen...

LBO Questions and Answers (Graded A) Walk me through a basic LBO model. - ANSWER ️️ "In an LBO Model, Step 1 is making assumptions about the Purchase Price, Debt/Equity ratio, Interest Rate on Debt and other variables; you might also assume something about the company's operations, such as Revenue Growth or Margins, depending on how much information you have. Step 2 is to create a Sources & Uses section, which shows how you finance the transaction and what you use the capital for; th...

LBO Modeling / LBO Modelling Exam from Wall Street Prep 2024 PASS A+ What do LBO FCF's tell us? - ANSWER-Tells you how much cash is available to repay *debt principal* each year after already paying for normal expenses and debt interest Can a PE firm earn a solid return if it buys a company for $1 billion and sells it for $1 billion 5 years? - ANSWER-Yes, if it uses a certain amount of debt to purchase the company- if they raise $500m, and use $500 cash, the company's FCF's are ...