How to Build a Leveraged Buyout (LBO) Model in 5 Steps! (FREE Excel Included)

Поделиться
HTML-код
  • Опубликовано: 2 янв 2025

Комментарии • 168

  • @rareliquid
    @rareliquid  Год назад +13

    If you're interested in the Wall Street Prep + Wharton Private Equity online certification program, be sure to use my code RARELIQUID for a $300-500 discount!
    ► New cohorts are constantly opening up so you can use code RARELIQUID at any time
    ► tinyurl.com/54zjjhv4
    💻FREE LBO Model💻
    ► tinyurl.com/rareliquid-simple-lbo
    🍎Sign up for my courses🍎
    ► How to get into MBA programs: forms.gle/9yEyycuP7NnQBjue8
    ► How to get into investment banking: forms.gle/wt4cZrezbxVgNzGUA

    • @Dogs_france
      @Dogs_france 3 месяца назад

      Why did you start reimbursing the cheapest debt instead of reimbursing the 12% debt ?

  • @camilleassiadam5057
    @camilleassiadam5057 Год назад +18

    I’ve watched all of BIWS and WSP and you demo better than them because you build the model from scratch and we can understand why you’re making every decision/assumption. A lot more applicable, would def buy a full modeling course from you.

  • @precioussaad
    @precioussaad 4 месяца назад

    Thanks!

  • @rareaqua7
    @rareaqua7 Год назад +6

    Greetings from Frankfurt, Germany! I’m continuously amazed by the exceptional quality of your financial modeling content on RUclips. Your expertise in simplifying complex finance concepts and making them accessible to everyone is truly remarkable. In today’s world, where such knowledge is often behind paywalls, your generosity in sharing it for free is highly commendable. Your contributions are not just educational but also inspirational for aspiring finance professionals globally. Keep up the fantastic work!

  • @ng6966
    @ng6966 9 месяцев назад +1

    best LBO model video I've watched so far! thanks a lot!

  • @ggas33dfdf
    @ggas33dfdf Год назад +8

    Just a hint for everyone else: If you press F4 to fix the row for the revenue you can copy paste the formula for all other items in the model. That you way you don't need to reference revenue all the time :)
    Thanks for the video!

  • @altynnurzhekey9118
    @altynnurzhekey9118 Год назад +9

    Honestly the best LBO model tutorial I have ever seen! Can you please do the same for M&A model? Thank you for all your hard work, truly appreciate the content!!!

  • @AskRecieve
    @AskRecieve Месяц назад

    bro you are amazing ,i don't understand how you're not at 800 000 subscribers...thank you so much for your content, time and effort

  • @UNKNOWN-1589
    @UNKNOWN-1589 Год назад +6

    This video is unreal ! Thank you Ben

  • @antoniostefanile
    @antoniostefanile 9 месяцев назад +1

    All crystal clear to improve my models! Thank you!

  • @LarzOG
    @LarzOG 7 месяцев назад +2

    I loved the real estate analogies. Super helpful! It seems like this model could even be used to make a real estate purchase if I’m understanding correctly. It might even be easier to make certain assumptions in real estate as opposed to a business.

  • @shubhankarshekhar3447
    @shubhankarshekhar3447 Год назад +5

    Literally was looking for lbo today..man amazing work 👏

  • @linghuizhu9831
    @linghuizhu9831 Год назад +8

    Literally the best LBO tutorial on the market! Could you also share one tutorial for project financing and one for real estate sector? Thank you!!

  • @ayushjain2871
    @ayushjain2871 11 месяцев назад +1

    Loved the video. People like you sharing such realistic financial models are seriously rare. Really thankful for it.❤❤

  • @bennykell3
    @bennykell3 Год назад +9

    Very good video, watched it all start to finish. You learn something new everyday! I work for a hedge fund for a convertible strategy, but always interested in learning new modelling - even after 10 years in the industry. All the best

  • @chelseajacobs8876
    @chelseajacobs8876 Год назад +1

    Thanks for putting this fantastic lecture. Please we want more advanced LBO lectures.

  • @caio-verso
    @caio-verso 5 месяцев назад

    Fantastic video! The step-by-step approach to building an LBO model is incredibly clear and easy to follow. I especially appreciate the free Excel file-it's a great resource for practicing the concepts discussed. Thanks for sharing such valuable content!

    • @rareliquid
      @rareliquid  5 месяцев назад

      glad it was helpful!

  • @dumengyue2401
    @dumengyue2401 9 месяцев назад +1

    geeeez, super useful!!!!! thank you !!! already follow and looking forward to watching other videos!!

  • @kathyzhang4713
    @kathyzhang4713 Год назад +1

    This is extremely helpful!! Thank you so much!!

  • @TommyZchannel
    @TommyZchannel Год назад +1

    This video was super interesting. I am waiting for the next one, thank you.

  • @michaelcortez1798
    @michaelcortez1798 Год назад +28

    Would love to see an M&A model in the future as well, great stuff as always!

  • @olli999
    @olli999 Год назад +1

    Very cool video Ben, thank you. I enjoy these model videos. That anime glass glare is a nice bonus haha.

  • @kapildev4551
    @kapildev4551 9 месяцев назад

    Hi...
    I have started watching your videos from DCF valuation methods and they are quite interesting and easy to follow. I have one request to you to make one video on IPO Valuation Model (build it from scratch) as I have not seen any detailed video on that. Thank you so much for all the work you are doing!!

  • @공민경-v5e
    @공민경-v5e 5 месяцев назад

    hello i got lots and lots of help from your video while preparing for private equity internship thank you so much for such a quality video!

  • @Roshanvyas25
    @Roshanvyas25 Год назад +4

    Hi Ben, your videos are always helpful. Please make a advance video with sensitivity table analysis

  • @jonahbollinger8296
    @jonahbollinger8296 4 месяца назад +1

    This was fantastic. Thank you.

  • @AriaKONG-l7k
    @AriaKONG-l7k Год назад +1

    Great tutorial! Thank you so much

  • @lauravelez1776
    @lauravelez1776 Год назад +1

    Amazing content!!! So easy to understand

  • @hyehyunpark530
    @hyehyunpark530 Год назад +9

    Your videos are super clear and helpful! Thank you for putting these together! ❤

  • @jeremybacani
    @jeremybacani Год назад +1

    Got served an IG ad for an LBO tutorial/template behind a pay wall - thanks for posting. Ain't no way I'm spending to unlock

  • @yannbeko
    @yannbeko Год назад +11

    Wow that's like a new version of merger and inquisition. It is really cool that you do this kind of vid's

  • @reefrocks12
    @reefrocks12 Год назад +1

    Thanks for the model. Would love to see a more detailed one with variable scenarios. Cheers

  • @fitnesswithayoub2903
    @fitnesswithayoub2903 Год назад +2

    yes please do more advanced LBO especially with the sesetivity analysis or table

  • @trebron9512
    @trebron9512 9 месяцев назад +1

    Amazing, suuuper helpful!! When is the more detail LBO case study video (incl scenarios, sensitivities, different types of debt etc) coming?? Cant wait!

  • @cheyyarguy
    @cheyyarguy 9 месяцев назад +1

    This is awesome! Thanks for the video and your time.

  • @bacool
    @bacool Год назад +5

    I see Ben post new modeling tutorial, i hit like button. very simple

  • @jcacere3
    @jcacere3 Год назад +1

    I would like an advanced LBO topics video. Great stuff

  • @xaudaniel
    @xaudaniel Год назад +1

    Very useful, Thank you.

  • @Talib_Husain18
    @Talib_Husain18 Год назад +1

    Thanks for such a succinct explanation!

  • @soumyaranjansenapati717
    @soumyaranjansenapati717 Год назад

    Crisp and clear video. Thanks for educating

  • @achmadfaizalazmi5199
    @achmadfaizalazmi5199 Год назад +1

    Thanks bro, this is very helpful! Looking forward to the advanced topics in LBO!

  • @xj7937
    @xj7937 Год назад +1

    your videos help a ton!

  • @aishwaryapotdar1348
    @aishwaryapotdar1348 Год назад +1

    Thanks for these videos ❤

  • @DawnOfDoom12
    @DawnOfDoom12 Год назад +2

    Hey @rareliquid , I am relatively new to finance and haven't studied it. I saw on most sources that we should always aim to pay off higher-interest debt, so would you mind quickly telling me why the bank debt is being paid off before the senior notes for this specific example? I don't think it affects the theoretical model in this case, but I'm guessing in practice, people would fight over who gets their money first, yes?

  • @narutokun616
    @narutokun616 Год назад +1

    HAHAHA the glasses - love it.

  • @htag90
    @htag90 Год назад +1

    thanks, really useful!

  • @aishwaryapotdar1348
    @aishwaryapotdar1348 Год назад +2

    Please do an accretion dilution video for M&A as well! Thanks for this video ❤

  • @FelipeCorto
    @FelipeCorto Год назад

    I love this type of content. Keep it up!

  • @chloecheng4109
    @chloecheng4109 4 месяца назад +1

    Hi, i was just wondering why you decided to pay down the bank debt first then senior note? wouldn't you want to pay off the debt with a higher interest rate first?

  • @MJ-cg8vp
    @MJ-cg8vp Год назад

    This is perfect! Loved it!

  • @shanisingh7964
    @shanisingh7964 4 месяца назад +1

    Hi, in step 2 for sources and uses, why have you said that the total sources xEBITDA is 10.2? I understand that's what it adds up to in the uses table, but for the sources side it adds up to equal 16.2x.

  • @nandoborchardt4327
    @nandoborchardt4327 Год назад +2

    When creating the debt schedule: Wouldn't we pay of the Sr. Notes first? Since Seniority Notes take priority?

  • @GurdeepSingh-qg5vo
    @GurdeepSingh-qg5vo 8 месяцев назад +1

    in the debt schedule you could pay out the senior notes first since they bear more interest than the bank debt?

  • @Anonbanker
    @Anonbanker Год назад +2

    Hey Ben, I’m an incoming summer analyst at JPM in the SF HC group. I really enjoy your videos and they helped me a lot with my recruiting process. I’d love to hop on a 15 min call at some point and hear a bit more about your experience if you have anytime in the next few weeks. Thanks!

  • @Steven.C.S.
    @Steven.C.S. Год назад +2

    Great video. Can you explain why you call it levered cash flow instead of unlevered cash flow as you do not take the debt and interest payments into account?

  • @edoardotamburi4598
    @edoardotamburi4598 8 месяцев назад

    In the explanation for the debt waterfall you said that the higher-interest debt should be paid first (to minimize interest expense). In the example, however, you started principal repayment from the bank debt (6%) to only pay the senior notes (12%) afterwards. I'm wondering if there's a reason for that that maybe I missed because I would've expected the opposite waterfall order... thanks in advance!

    • @mateobeltroy
      @mateobeltroy 8 месяцев назад

      That must’ve been a mistake. You’re correct, he should be modeling to pay off the higher interest debt first. Also, he is using the entire amount of levered free cash flow to pay the principal without considering that he needs to subtract the interest from that since he will not have the full amount of levered FCF to apply towards the principal because of the interest payments.

  • @akankshashrivastava100
    @akankshashrivastava100 Год назад +1

    If we paydown only 49 and so on which is less than total interest payment won't it be a negative sign for banks and will add up penalty to it?

  • @artlinerplus6039
    @artlinerplus6039 14 дней назад

    Hi Ben! Can you do a model for Growth Equity? (Do they use LBO Modeling too?)

  • @bensonlyu9827
    @bensonlyu9827 4 месяца назад +1

    Hi! thank you for the video but the free LBO download seems to have a bit problem since it says page not found after my registration

  • @leejason7379
    @leejason7379 Год назад +1

    Its my first time watching your video and thanks for the great stuff!!
    One question I had was,
    whether it is usually the case that the sponsor will have to paydown all of the tranche 1 principal before paying down any of the tranche 2 principal.
    Obviously, tranche 1 lender will not want the sponsor to paydown any of tranche 2 before tranche 1 principal is fully paid down,
    but I wonder if there are real world cases where sponsors are allowed to pay down at list a portion of tranche 2

  • @fachribudianto1490
    @fachribudianto1490 Год назад +3

    Hi Ben! For the next tutorial video could you build a company deck/pitch deck in powerpoint as an investment banker usually does? Thanks!

  • @MarcSee-t7c
    @MarcSee-t7c Год назад +1

    Thank you!

  • @gauravbhayana4626
    @gauravbhayana4626 Год назад +1

    Thanks! for the video but can you also upload a M&A Model soon?

  • @ayushkabra1119
    @ayushkabra1119 Год назад +1

    Why didn’t we choose to pay down the senior debt first and then the bank debt, as the senior debt has higher interest expense?

  • @musicgonnahelpme
    @musicgonnahelpme Месяц назад

    Hey, wanted to say big thanks for such a great tutorial, however, there is 1 question I have. When you calculate IRR, you raise MOIC to the power of 1/n. I checked approximate IRR for this model, by solving npv = 0 via solver and excel and got approximately same result for irr (24,95%). Could you please share some link with explanation on what is the math behind the formula you used in the model, because I fail to understand this unfortunately =(

  • @FeilinNi
    @FeilinNi Год назад +2

    Can you help doing a merger model with accretion/dilution? Thanks!

  • @mathieuract7777
    @mathieuract7777 2 месяца назад

    Why do we pay off the bank debt first if its interest rate is lower than that of the senior notes?
    Thanks ! 🙂

  • @leilaan9344
    @leilaan9344 Год назад +1

    Could you do a DCF model for a renewable energy or utilities company?

  • @eduardomangini8959
    @eduardomangini8959 4 месяца назад +2

    I couldn't donwload the video's LBO model, I got a "Page not found message" someone has it?

  • @wendelllim7332
    @wendelllim7332 Год назад +3

    Bro please make a more advanced lbo model please 🙏🏼

  • @SandraTan-id2wt
    @SandraTan-id2wt 8 месяцев назад

    Hey! Thanks for your video. Just wanted to ask about the paydown on the senior notes. Shouldn't the formula be something like =MIN(Levered FCF, MIN((Levered FCF - Bank Debt Paydown), Beg Balance of Senior Notes). Because if let's say the amount of LCFC you have after paying down your bank debt exceeds the beginning balance of your senior notes, then that would give you a negative ending balance for your senior notes right? Thanks!

  • @josslaughton-scott9878
    @josslaughton-scott9878 11 месяцев назад +1

    I get why you’d want to pay down the higher interest trance first, but surely the lower interest is less risky and therefore more senior?

  • @collegechats
    @collegechats Год назад +1

    How come you didn't include the debt repayments in computing LFCF? Also how come you started your waterfall paying down the lower cost debt first? Would you not pay down the 12% senior notes first? Thanks for this tutorial regardless - super helpful!

    • @axeldahlman2405
      @axeldahlman2405 Год назад +4

      I think the bank requires you to pay down their debt first, its one of their commands

    • @monkynutss711
      @monkynutss711 Год назад

      @@axeldahlman2405 Correct

  • @vikasmishra7325
    @vikasmishra7325 Год назад

    Hi Ben, Are you aware of debt beta which is prevalent in the PE domain? If yes, please make a video on it.

  • @piojosefina2568
    @piojosefina2568 Год назад +1

    why is the net present value of free cash flow not calculated?

  • @JY-kk9uo
    @JY-kk9uo Год назад +1

    Can you model out the 3 statements and then perform a DCF?

  • @leonschoorl3614
    @leonschoorl3614 2 месяца назад +1

    Goat🔥

  • @Trendingshort110
    @Trendingshort110 Год назад +1

    Thanks dear 😊

  • @harshsharma5286
    @harshsharma5286 9 месяцев назад

    if terminal value is given alongside levered FCFs, should I do TV+PV(sum of FCFF) - Net Debt or PV - Net Debt ??

  • @TwoDozenSigma
    @TwoDozenSigma 2 месяца назад

    Shouldn't Senior Note's Paydown be changed from "min(Levered Cash Flow, (Levered Cash Flow - Tranche 1 Paydown))" to "min(min(Levered Cash Flow, (Levered Cash Flow - Tranche 1 Paydown)), Tranche 2 Beginning balance)"?

  • @justintse4017
    @justintse4017 3 месяца назад

    Thanks for the video! Cant seem to be able to download the template from your email tho

  • @michaelchitawo5699
    @michaelchitawo5699 Год назад +2

    Hi thanks for always putting out great content. I wanted to ask if you have a real estate valuation course? One that lets you calculate the expected return on a rental purchased?

  • @RR-et6zp
    @RR-et6zp Год назад +1

    yeah but how do you raise money to get this

  • @adiashro
    @adiashro Год назад

    In the model you took an assumption of 10× multiple which reflects a hurdle rate of 7%~ required by investors, but you also pointed that the usual hurdle rate (wacc) required by PE is usually 15% , which reflects a 5× multiple. How do you settle the contradiction?

  • @hidiryildiz3477
    @hidiryildiz3477 Год назад +1

    Hi, Can't download the excel. Could you share the link please ?

  • @vedad5205
    @vedad5205 Год назад

    Hi, do you have modeling for private debt /credit? Thanks

  • @murarithakur3377
    @murarithakur3377 Год назад +1

    Hey you are saying levered free cash flow but according to your formula it is unlevered free cash flow as you are not subtracting interest.
    Can you please confirm if it is unlevered or levered free cash flow?
    Also i can't find the pdf

  • @LiquidM3th
    @LiquidM3th Год назад +2

    Wouldn’t it make more sense to pay off the debt with the higher interest rate?

  • @vishnuVardhan-in6em
    @vishnuVardhan-in6em 9 месяцев назад

    i have a doubt i am not getting why you calculated paydown value differently for in debt schedule for bank debt and sr notes can you clarify that

  • @marcodimarco2990
    @marcodimarco2990 Год назад

    why didn't you pay senior debts for first, given they have higher cost in percentage?

  • @seangommier8652
    @seangommier8652 Год назад

    Appreciate your videos. However, I will give one point of feedback. This makes the PE process seem so simple. I understand there are use cases for a high-level LBO, but think for those looking into this, it would be helpful to at least mention that in general, there is a massive underlying operating model that is leveraged. It isn't just plugging in a margin expansion and revenue growth rate.

  • @TT-xl2td
    @TT-xl2td Год назад

    Fantastic breakdown 🥸

  • @julie_chen
    @julie_chen 11 месяцев назад

    Thank you ! 🙏

  • @marvingibson6170
    @marvingibson6170 5 месяцев назад

    Does the link to the free LBO model still work? I tried accessing it but was told that the page no longer exist

  • @lazizaakramova8602
    @lazizaakramova8602 Год назад

    What do you think about AI in the financial industry

  • @dylanazcarate3944
    @dylanazcarate3944 6 месяцев назад

    You didn’t address the circularity from interest payments…does this model not need a circuit breaker?

  • @BellumNonAequa
    @BellumNonAequa Год назад +5

    The formula for the Paydown of Tranche B (Sr. Notes) is problematic and should not be used. Although it works for this particular model because Tranche B debt is untouched here, you will end up with negative values when Tranche A is completely paid off within the LBO period. You should use:
    =IF(Tranche A ending bal.>0,0,MAX(0,MIN(Levered FCF - Tranche A paydown,Tranche B opening bal)))

    • @wronggg
      @wronggg 10 месяцев назад

      Thank you very much for this correction!

  • @aishwaryapotdar1348
    @aishwaryapotdar1348 Год назад

    Wouldn’t this create a circularity? Cause the interest expense affects the levered fcf which affects the debt paid down and the interest paid? Or am I tripping?

  • @joaovictorbenaconoliveira8326
    @joaovictorbenaconoliveira8326 Год назад

    Anyone know what mechanical keyboard he uses?

  • @tarunsuryan1184
    @tarunsuryan1184 4 месяца назад +1

    I didn't find any free excel template.. why you claiming it to be there in video section ?

    • @musicgonnahelpme
      @musicgonnahelpme Месяц назад

      The problem is gone buddy, the link is in the description and it works now.