Introduction
What is ‘LBO’? Leveraged Buyout (LBO) is a financial transaction wherein a company is acquired using equity and debt. An ‘LBO Model’ is an Excel-based model used to evaluate LBO transactions. Assets of both companies (the acquired and acquiring) act as loan collaterals.
In most cases, the acquiring company prefers to invest the least amount of equity and fund the rest with debt and non-equity sources. The LBO model primarily aims to enable investors to accurately and thoroughly assess transactions and earn the highest possible risk-adjusted internal rate of return (IRR). The investment decision is with the main aim of making most returns on its equity and using debt to increase potential returns.
This IRES training course will empower you with detailed information about an LBO model. Since this is a critical model that could define a company’s success or failure in terms of its financial assets and returns, knowledge and experience of all aspects of LBO, including loan structuring, pricing and leveraged acquisition finance, will reduce risks of financial loss to either party. Through this course, you will acquire the skills and capabilities to assist organisations in making
Duration
10 Days
Who Should Attend?
- Senior management intending to make considerable investments and acquiring other companies
- Managers, leaders and executives involved in functions related to LBO transactions
- Legal and financial advisors of organisations performing their respective roles for organisations
- Compliance officers checking and ensuring adherence to all rules and regulations
- Fund managers and treasurers with a specific responsibility of managing safety and effective use of bank funds
- Any other professional interested in knowing more about LBO transactions, specifically the LBO model and its related concepts
Course Level:
Course Objectives
At the end of this IRES training course, participants will learn:
- Receive a comprehensive understanding of LBO and LBO models to assist one’s organisation in successfully conducting such transactions
- Evaluate, on behalf of one’s organisation, requests for various methods of finance for LBO transactions, thereby establishing oneself as a dependable, credible employee
- Review and structure loans effectively to minimise risks and maximise benefits
- Analyse important factors and recommend strategies for LBO transactions to be undertaken by one’s organisation
- Prepare and structure project finance contracts covering all applicable clauses and risks, thereby protecting one’s organisation against any risk or financial loss, in turn proving one’s talent and gaining greater growth opportunities
- Examine current systems within one’s organisation and present reports on its actual financial position and capability to conduct such transactions
- Take strategic steps at an organisational level to overcome any financial loss worrying the organisation, in turn contributing to organisational development
- Acquire relevant multitasking skills and superior knowledge to handle multiple facets of LBO transactions, thus giving one the confidence to successfully take up roles across any organisation, fostering faster career progression
- Mentor other professionals on important theories and practices related to LBO transactions
Course Outline
Module 1 – Characteristics of LBOs
- Stable cash flows
- Relatively low fixed costs
- Relatively little existing debt
- Valuation
- Strong management team
Module 2 – Components of an LBO Capital Structure
- Bank debt
- High yield debt/subordinated debt
- Mezzanine debt
- Equity
- Credit metrics
- Sponsor internal rate of return
Module 3 – Steps to LBO Modelling
- Assumptions
- Financial statements
- Transaction balance sheet
- Debt and interest schedules
- Credit metrics
- Discounted cash flow/internal rates of return
- Sensitivity analysis, charts and graphs
Module 4 – Key Credit Metrics in an LBO Model
- Debt/EBITDA
- Interest coverage ratio
- Debt service coverage ratio
- Fixed charge coverage ration
Module 5 – Historical Financial Statements
- Income statement
- Balance sheet
- Cash flow statement
- Supporting schedules
- Goodwill and purchase price allocation
Module 6 – Forecast Financial Statements
- Forecast setup
- Income statement
- Balance sheet
- Supporting schedules
- Cash flow statement
Module 7 – Strategies for LBO Financing
- Seller financing
- Equipment financing
- Own funds
- Senior debt
- Subordinated debt
- Mezzanine debt
Module 8 – Characteristics of Leveraged Loans
- Principal amortization
- Secured
- Floating rate
- Term
- Covenants
- Private
- Prepayment
Module 9 – Loan Structuring
- Purpose, term and repayment matching
- Loan documentation
- Loan agreements and covenants
- Interest rates and fees
- Pricing for risks
- Linking price and risk to capital adequacy
Module 10 – Acquisition Finance
- Mergers and acquisitions
- Target company valuation
- Acquisition financing through equity and debt
- Mezzanine finance
- Paper finance
- Shareholder impact
Related Courses
Course Administration Details:
METHODOLOGY
The instructor-led trainings are delivered using a blended learning approach and comprise presentations, guided sessions of practical exercise, web-based tutorials, and group work. Our facilitators are seasoned industry experts with years of experience, working as professionals and trainers in these fields. All facilitation and course materials will be offered in English. The participants should be reasonably proficient in English.
ACCREDITATION
Upon successful completion of this training, participants will be issued an Indepth Research Institute (IRES) certificate certified by the National Industrial Training Authority (NITA).
TRAINING VENUE
The training will be held at IRES Training Centre. The course fee covers the course tuition, training materials, two break refreshments, and lunch. All participants will additionally cater to their travel expenses, visa application, insurance, and other personal expenses.
ACCOMMODATION AND AIRPORT PICKUP
Accommodation and airport pickup are arranged upon request. For reservations contact the Training Officer.
- Email: [email protected]
- Phone: +254715 077 817
TAILOR-MADE
This training can also be customized to suit the needs of your institution upon request. You can have it delivered in our IRES Training Centre or at a convenient location. For further inquiries, please contact us on:
- Email: [email protected]
- Phone: +254715 077 817
PAYMENT
Payment should be transferred to the IRES account through a bank on or before the start of the course. Send proof of payment to [email protected]
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