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LBO Modelling and Valuation

The document outlines a project aimed at creating a Leveraged Buyout (LBO) model and valuation for a mid-cap Indian company from a private equity perspective. It includes objectives, project components such as target company selection, industry analysis, and LBO model structure, as well as deliverables like an Excel model and presentation deck. Additionally, it mentions optional sections for credit rating impact and macroeconomic stress testing.

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hellobrother8323
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141 views4 pages

LBO Modelling and Valuation

The document outlines a project aimed at creating a Leveraged Buyout (LBO) model and valuation for a mid-cap Indian company from a private equity perspective. It includes objectives, project components such as target company selection, industry analysis, and LBO model structure, as well as deliverables like an Excel model and presentation deck. Additionally, it mentions optional sections for credit rating impact and macroeconomic stress testing.

Uploaded by

hellobrother8323
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

LBO Modelling and Valuation

Aim: LBO Modeling and Valuation of a Mid-Cap Indian


Company: A Private Equity Approach

1. Objective:
To create a comprehensive Leveraged Buyout (LBO) model and
strategic valuation analysis for a real, publicly listed mid-cap Indian
company. This project will simulate a private equity investment
with a full financial model, operational assumptions, and investment
thesis suitable for high-impact interviews and competitions.

2. Project Components:
A. Target Company Selection
 Select a real Indian mid-cap company (e.g., in manufacturing,
tech, or consumer sectors) listed on NSE/BSE.
 Investment Criteria:
o Consistent cash flows
o Room for operational improvements
o Moderate debt or under-leverage

B. Industry & Strategic Analysis


 Market overview of the selected company’s sector
 Competitor benchmarking (top 3-4 companies)
 SWOT(Strength, Weakness, Opportunities, Threats) analysis
 Justify the strategic rationale for a buyout

3. LBO Model Structure (Excel-based)


A. Entry Assumptions
 Purchase price (EBITDA multiple method)
 Equity contribution vs. debt mix
 Transaction fees
B. Operating Model (5–7 Years)
 Revenue growth assumptions (base/bull/bear)
 Margin projections (EBITDA, EBIT)
 Capex and working capital schedules
 Depreciation & tax modeling
C. Financing Structure
 Senior secured debt
 Subordinated debt (if any)
 Interest schedules and repayment
D. Exit Strategy
 Exit via strategic sale or IPO after 5–7 years
 Exit multiple range scenarios (5x, 7x, 8x EBITDA)
 Calculate:
o Internal Rate of Return (IRR)
o Money-on-Money (MoM) multiple
o Payback period
E. Sensitivity Analysis
 Exit multiple vs. IRR
 Revenue CAGR vs. MoM
 Leverage vs. Return Matrix
F. Debt & Covenant Tracking
 Debt/EBITDA ratio annually
 Interest coverage ratio
 Optional: Add DSCR (Debt Service Coverage Ratio)

4. Bonus Sections (Optional)


A. Credit Rating Impact Analysis
 Estimate likely credit rating post-buyout
 Assess refinance ability based on rating and macro
trends
B. Macroeconomic Stress Testing
 Use RBI rates, inflation expectations
 Re-model impact of interest rate hike, INR depreciation
5. Deliverables
 Excel File: Fully functional and clean LBO model
 Presentation Deck (10-12 Slides):
o Executive Summary
o Target Company Overview
o Industry Trends
o Deal Structure
o Model Highlights
o IRR & Exit Scenarios
o Strategic Recommendations
o Risk Assessment

6. Tools & Data Sources


 Screener.in, NSEIndia.com
 Company Annual Reports (5–7 years)
 Excel / Google Sheets
 RBI Bulletins (for macro inputs)
 Equity research reports (if accessible)

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